Zim should focus on cigarette manufacturing – economic analyst
13 Mar 2019 - by
Zimbabwe’s tobacco industry could potentially earn an additional US$5 billion in annual export revenue should it manufacture cigarettes instead of simply selling the raw commodity, according to economic analyst, Victor Bhoroma.
Addressing local media ahead of the launch of this year’s tobacco auction this month, Bhoroma said the country was missing out on the lucrative global cigarette manufacturing market and should introduce policies that incentivised value addition while suppressing appetite for exporting raw commodities.
He pointed out that the average export price for raw tobacco from Zimbabwe had been US$4.85/kg in 2018 while the average price for cigarettes was US$32/kg. “By exporting the same amount of kgs (after factoring in weight losses in manufacturing), Zimbabwe could have realised $5.8 billion in one year,” said Bhoroma.
He added however that value addition of tobacco in Zimbabwe faced challenges such as weak policy frameworks, market size, capital constraints, cumbersome export processes and a volatile business operating environment.
"The Zimbabwean market is relatively small in terms of cigarette consumption and consumers lack the necessary buying power due to economic downturn. As such export-oriented production should be our priority focus as a country," said Bhoroma.