Source: Call for Mutapa to propel tobacco value chain – herald
Martin Kadzere
The Mutapa Investment Fund could serve as a vehicle to de-risk the tobacco industry and ensure its participation in value addition and long-term wealth creation, a senior executive said at the 2025 Tobacco Conference hosted by Zimpapers last week.
The conference was sponsored by CBZ, TIMB, OneMoney, POSB, Hunyani, Clover Leaf Motors, TSL, Pacific Cigarette Company and Purleigh Investments.
According to Chevron Tobacco executive director Mr Tapiwa Masedza, Mutapa is uniquely positioned to lead a “sovereign intervention” by investing in a vertically integrated tobacco value chain that includes farmer financing, tobacco processing infrastructure and export market development.
Mutapa was created to strategically invest across the economy, driven by the core objective of building long-term wealth for the citizens.
The proposal aligns with Zimbabwe’s National Economic Goals, including the Tobacco Value Chain Transformation Plan and the National Development Strategies (NDS1 and NDS2).
Mr Masedza highlighted that with over 90 percent of Zimbabwe’s tobacco export business dominated by foreign companies, the country loses billions of dollars each year in processing margins, export revenue, and potential for rural development.
The conference primarily focused on beneficiation, buoyed by the country’s record achievement of 351 million kg of tobacco.
Central to Mr Masedza’s proposal is the establishment of a robust contract farming scheme that would “provide comprehensive support to farmers, including full input financing, agronomic guidance and secure offtake agreements”.
Furthermore, the proposal includes significant investment in local processing infrastructure involving the construction of a green leaf threshing (GLT) plant and optional cut rag line to enhance profit margins and maximise forex earnings.
As the Government sets an ambitious target of 400 million kg for the upcoming season, Mr Masedza highlighted the critical need for enhanced GLT infrastructure to prevent bottlenecks in processing.
Mr Masedza’s plan outlines a strategic approach to export and trade, focusing on generating foreign currency through the export of processed lamina and cut rag.
He emphasised that the initial phase of this integration would focus on midstream processing, deliberately excluding cigarette manufacturing to maintain a clear focus on value addition within the initial stages.
Crucially, the proposal seeks to empower local farmers directly and Mr Masedza said Mutapa could enable farmer cooperatives and groups to acquire a direct stake in a Special Purpose Vehicle, ensuring they directly benefit from the value addition process and participate in long-term wealth creation.
In a follow-up to proposals for localising the tobacco value chain, a senior treasury and finance expert, Mr Munyaradzi Kavhu, weighed in on the urgent need for innovative domestic funding mechanisms to support beneficiation in the sector.
He highlighted a critical disparity; while Zimbabwe boasts a record harvest, only about 10 percent of the output undergoes local value addition.
This, he asserted, leaves substantial room for improvement and represents a significant missed opportunity for the Zimbabwean economy.
“Our major pain points remain low productivity, limited local funding mechanisms and minimal value addition,” Mr Kavhu said, emphasising the aim to drastically reduce the export of raw tobacco and instead focus on increasing the export of processed products like cut rag and cigarettes.
He explained that processing tobacco locally promises higher earnings through premium prices for finished goods and a boost to the domestic economy by reducing the need for imported processed products.
Mr Kavhu further advocated for robust investment promotion and incentives to stimulate local cigarette production, saying this would create more jobs and ensure greater value retention within the economy.
He outlined several concrete strategies for more sustainable local funding. He suggested widening the network of buyers and deepening external markets for value-added tobacco output.
Furthermore, Mr Kavhu proposed innovative financial instruments such as issuing commercial paper specifically for tobacco processing projects, backed by product valuation certificates.
He also recommended that the financial sector consider creating tobacco bills or bonds to attract investments from the Zimbabwean diaspora.
In an effort to leverage existing assets, Mr Kavhu encouraged tobacco processors with available buildings to utilise them as collateral for financing value addition projects.
He also put forward the idea of a special Tobacco Value Addition Fund, offering sustainable interest rates, secured by collection accounts and drawing from the revenues of value addition projects.
He urged industry players to plough back retained incomes into tobacco value addition ventures and called for inviting international tobacco export off-takers to establish local value addition ventures in partnership with local entities.
Mr Kavhu noted the collaborative efforts of monetary authorities, financial institutions and institutional investors would be paramount in expanding and implementing creative funding solutions to transform the tobacco industry.
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