Zimbabwe is the largest producer of tobacco in Africa (Problem Masau)

Although Zimbabwe has faced a raft of macro-economic challenges in the past two decades, these have done nothing to change the country's tobacco sector success story. The cooperation in this regard with China has been a major factor in the accomplishment of this agrarian sector.

Zimbabwe is the largest producer of the golden leaves in Africa and the sixth-largest worldwide, according to the Zimbabwe Tobacco Industry and Marketing Board (TIMB).

In a bid to add value to Zimbabwe's tobacco sector, China Tobacco Shaanxi Industrial Co. Ltd. (CTSIC) has recently partnered with the local Pacific Cigarette Co. (PCC) to manufacture cigarettes under the Acacia Cigarette brand. PCC founder Adam Molai said that his company is excited about the partnership and that the Acacia cigarette series will target the Chinese living in Africa.

"Research has shown that some Chinese living in Africa struggle with [the flavor] of local brands, hence the need to have cigarettes that they identify with," said Molai.

The partnership aims to produce a new line of cigarettes that will use Zimbabwean tobacco and Chinese preferred flavors. The initial target market will be Chinese community residents in Zimbabwe, but later the more than 1 million Chinese people living throughout Africa, according to the latest Annual Report on Overseas Chinese Study released by the Social Sciences Academic Press of China.

Niche market

Speaking during the launch of the Acacia series in December last year, CTSIC Executive Officer Bai Gang said the introduction of Acacia cigarettes was an attempt to widen the company's base. Bai said his company was responding to a proposal by the China National Tobacco Corp. encouraging Chinese tobacco companies to cooperate with overseas tobacco businesses.

Zhao Baogang, Chargé d'Affaires of the Chinese Embassy in Zimbabwe, said the Chinese community in Zimbabwe and Africa at large was paying a fortune to import tobacco products from China.

"Over the years, Chinese communities in Africa have been spending millions importing tobacco products from China and the Acacia series will ease their burden," he said.

Pacific Cigarettes Co. Global CEO Yves le Boulenge said the partnership, the first of its kind signed between an African cigarette manufacturer and a state-owned Chinese tobacco company, would have a positive ripple effect on local tobacco production.

"Many people know that there is tobacco produced in Zimbabwe, but not many know that it is actually the best [tobacco quality] in the world. So this partnership will also help in elevating the image because we will be exporting [the product]," he said.

Farming cooperation

Apart from providing the specific tobacco products for the local Chinese consumers, Chinese companies are also involved in assisting local farmers to improve their crops.

When Enock Gara received a farm in 2001, through government's land redistribution program, he did not have any tobacco farming experience.

"For three seasons, the farm was lying idle. Prior to getting the farm, I was a subsistent farmer. I would just grow maize for my family consumption. I also had no inputs," he said.

Eighteen years on, Gara is now one of the top farmers in Zimbabwe producing more than 1,000 bales of tobacco each year. He is one of several farmers in Zimbabwe contracted by Tianze Tobacco Co. Ltd. to produce tobacco.

Established in 2005, Tienze is a Chinese-registered international tobacco merchant involved in the entire tobacco supply chain in Zimbabwe.

Through contracts, farmers are not only provided with inputs - such as fertilizer, tools and other necessary equipment for tobacco production - but are also given a pre-arranged price for the final product, one that is often higher than what they could earn on the auction floor.

In addition, Tienze introduced interest-free loans, technical assistance and agricultural training along with the input subsidies. The complete package is valued at $40 million annually.

"Thanks to the Chinese company, my life has been transformed for the better. I can now send my children to university through farming," he said.

The number of farmers Tienze supports in Zimbabwe has grown from one in 2005 to the current 305, with the total growing area under contract rising from 20 hectares to 8,720 hectares.

Value addition still lacking

Tobacco leaf accounts for 10 percent of Zimbabwe's gross domestic product, underlining its significance to the country's economy. According to the TIMB, Zimbabwe produced 252.6 million kg of tobacco leaves with 184 million kg being exported, raking in $892 million in revenue last year.

The tobacco industry is one of the biggest employers in Zimbabwe, providing direct employment to 171,000 small-scale farmers who supply about 80 percent of the crop, according to the TIMB.

"The tobacco value chain provides about 50,000 indirect jobs. We are talking about auction houses, cigarette manufacturers, retailers, inputs suppliers, merchants and other service providers," said Andrew Matibiri, Chief Executive Officer of TIMB.

However, Zimbabwe economist Mike Vareta expressed concern over the loss in revenue from lack of value addition.

"The country is losing billions of dollars through exporting unprocessed tobacco. The whole world is now talking about value addition and cigarette manufacturing is another way of adding value to the country's flue-cured tobacco," he said.

The average export price for raw tobacco from Zimbabwe was $4.85 per kg in 2018, while the average price for cigarettes was $32 per kg. By exporting the same amount, Zimbabwe could earn $5.8 billion more in one year, said Vareta.

Fellow economist Victor Bhoroma shared the same sentiments, saying the benefits for tobacco value addition are immense.

"These range from higher export earnings, local employment creation, economic growth, widening of the tax base, downstream value creation to economic diversification and manufacturing-capacity deve­lopment," he said.

Bhoroma added that these benefits will uplift the economy in terms of balance of trade, considering the country's perennial deficit position when it comes to the current account.

Over 66 countries in the world consume Zimbabwe's highly regarded flue-cured tobacco, with China, South Africa, Belgium, the UAE and Russia being the biggest buyers. According to experts, processing tobacco locally, like the partnership between CTSIC and PCC, is a good way of adding value to Zimbabwe's tobacco industry.

(Reporting from Zimbabwe)

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