Obert Chifamba Agri-Insight
I understand a recent demonstration was over banks’ refusal to allow them cash withdrawals of up to $1 000 as proclaimed by a tripartite agreement involving Reserve Bank of Zimbabwe (RBZ), Tobacco Industry and Marketing Board (TIMB) and the Zimbabwe Tobacco Association (ZTA), which authorised withdrawals of $1 000 for initial sales and $500 for subsequent ones.
The farmers were also protesting against a decision by banks to limit their withdrawals to a maximum $300 and delays in processing of their payments. Police had to be called in to quell this potentially riotous situation.
Last year the RBZ governor Dr John Mangudya accorded the same farmers corporate status, which allowed them to make withdrawals of up to $10 000 although the highest amount we hear the farmers managed to get was $3000.
There is a pattern that is now emerging from these events that every time RBZ gives a directive the banks defy it.
It leaves one wondering whether the banks also understand what the farmers will be going through or go through in their line of business.
The first fact to consider is that it is because of the farmers that buyers flock to the country bringing with them off-shore funds to buy the gold leaf.
Banks must also realise that every tobacco marketing season brings with it a huge improvement in the liquidity conditions because of the farmers, so they deserve a bit of respect and professional treatment.
It’s not that I am trying to take anything away from the fact that the economy is facing liquidity challenges but farmers being farmers, do not hold onto cash.
They are one group of business people that always keep the money circulating because they have many things to attend to that need cash so the idea of giving them all or a bigger chunk of their money at once may not be bad after all. Remember they engage seasonal labour that is paid at the end of the season in most cases.
Such casual helpers normally do not even have bank accounts for farmers to make transfers and neither do most shops in the farming communities have swipe facilities that may enable some barter trading of some kind.
If for instance, a farmer chooses to resort to the use of plastic money and sends payments for services through a facility like Ecocash, the biggest challenge is that most agents out there do not have the cash.
Some shops that accept Ecocash payments are reportedly forcing the farmers or all people generally to first grocery purchases of a certain amount, which eats into the ultimate amount a person had been anticipating to get, so the farmer just needs the cash to do his business.
We also hear that shops here in Harare are taking advantage of the cash crisis to milk the farmers dry by charging service fees on top of farmers’ cash requests.
It is interesting to note that 20 days into the tobacco selling season, farmers had delivered 43 million kilogrammes of tobacco worth $114 million, which to me is quite a colossal feat and deserves a corresponding pat on the back too.
Last year they had delivered 30 million kilogrammes worth $82 million during the same period so at least they need to see that money making some impact in their lives.
For the farmer, effective planning is usually possible when all their cash is available and in their coffers, which naturally allows them to deploy it as soon as a point of need is established. Maybe there is something RBZ is not doing to make sure banks comply or they may not be strictly monitoring the monies coming in through sales to make sure banks do not claim not to have cash when in reality they have it.
Maybe the big question we need to interrogate is whether RBZ is releasing the money to the banks for the purposes of paying the farmers as agreed or not.
Banks may easily take the flak for a situation that is not their own making because they may not be receiving the money from the Central Bank but if they are getting the cash and playing tricks with it then they should be dealt with.
As monetary authorities, RBZ should have a mechanism to deal with errant banks that tend to undermine its authority because their actions have dire consequences on the economy.
Banks should also take note that if tobacco farmers stop producing the crop, there will certainly be a huge hole in the national economic pie-chart whose presence they will also feel.
At the moment, for instance, the bulk of the foreign currency they (banks) and other sectors of the economy are using is coming from tobacco sales so the best they can do is to make sure the producers of the golden leaf keep producing it.
Now farmers should be buying seed, chemicals, fertilisers and many other basic requirements for the establishment of seedbeds in readiness for a fresh outing so they need the cash badly. They have just had enough of those RBZ and banks’ unfulfilled promises and for once, let’s pray there will be change.