To­bacco ex­ports can grow 5x – RITCO…

Zambian Business Times - - FRONT PAGE -

ZAM­BIA’S to­bacco pro­duc­tion – and in ef­fect ex­ports – can grow five times the cur­rent pro­duc­tion lev­els, says Roland Im­pe­rial To­bacco sales and mar­ket­ing di­rec­tor Zabu Mwenda.

In an ex­clu­sive in­ter­view with the Zam­bian Busi­ness Times, Mwenda said that cur­rently about two mil­lion people are di­rectly and in­di­rectly em­ployed in the to­bacco in­dus­try.

ZAM­BIA’S to­bacco pro­duc­tion – and in ef­fect ex­ports – can grow five times the cur­rent pro­duc­tion lev­els, says Roland Im­pe­rial To­bacco sales and mar­ket­ing di­rec­tor Zabu Mwenda.

In an ex­clu­sive in­ter­view with the Zam­bian Busi­ness Times, Mwenda said that cur­rently about two mil­lion people are di­rectly and in­di­rectly em­ployed in the to­bacco in­dus­try.

He said that RITCO wants to work with var­i­ous stake­hold­ers to grow the lo­cal in­dus­try and sup­port the growth and cul­ti­va­tion of to­bacco to higher lev­els in Zam­bia.

“Con­sid­er­ing that our neigh­bour­ing coun­tries such as Zim­babwe do about 200 mil­lion tons per year, Malawi does about 150 mil­lion tons per year and Zam­bia only does about 30 mil­lion tons a year, there is room and an ur­gent need to put in place mea­sures that will en­able farm­ers grow more to­bacco. It’s a cash crop that ben­e­fits the Zam­bian econ­omy by bring­ing in the much needed forex through ex­ports and boosts the econ­omy in terms of rev­enue gen­er­a­tion by lo­cal farm­ers.

RITCO, a member of the Sul­mach Group of Com­pa­nies, was in­cor­po­rated in 2001. Its core ac­tiv­i­ties are man­u­fac­tur­ing and dis­tri­bu­tion of cig­a­rettes and other to­bacco re­lated prod­ucts. The com­pany is ef­fec­tively ad­min­is­tered via two au­ton­o­mous di­vi­sions: The Man­u­fac­tur­ing Divi­sion and the Trading Divi­sion.

Af­ter its in­cor­po­ra­tion in 2001, RITCO started to man­u­fac­ture and trade cig­a­rettes and other to­bacco re­lated prod­ucts. The com­pany boasts of the im­por­tant role it has played in re­viv­ing the lo­cal to­bacco in­dus­try.

“We started cre­at­ing lo­cal demand for to­bacco for farm­ers by en­cour­ag­ing the lo­cal growth of to­bacco in Zam­bia,” Mwenda told ZBT.

The com­pany has also acted as an equal­izer. As a lo­cal en­tity it­self, it has been able to sup­port and sus­tain the lo­cal in­dus­try con­sid­er­ing that the to­bacco in­dus­try in Zam­bia has been dom­i­nated by multi-in­ter­na­tional firms which have been im­port­ing their prod­ucts into the Zam­bian to­bacco in­dus­try rather than lo­cally sourc­ing from farm­ers and lo­cally man­u­fac­tur­ing.

“We have de­vel­oped a lo­cal to­bacco in­dus­try in terms of man­u­fac­tur­ing of cig­a­rettes, cre­at­ing demand for the farm­ers by en­cour­ag­ing the growth of the lo­cal cul­ti­va­tion farm­ers. We also look at the value chain by sup­port­ing the pro­vi­sion of in­puts and go­ing down to the cul­ti­va­tion of the crop”, Mwenda said.

He said that a pri­mary pro­cess­ing plant was be­ing de­vel­oped which will ba­si­cally en­tail that farm­ers will be able to get more value for their crop. RITCO will be able to buy raw to­bacco, process it and bring value ad­di­tion to the lo­cal farm pro­duced to­bacco, which will cre­ate ad­di­tional jobs in the coun­try as a whole.

Asked about the mar­ket share that RITCO com­mands, Mwenda said that the com­pany has well over one-third (above 33%) of the lo­cal to­bacco mar­ket share. The other big player is Bri­tish Amer­i­can To­bacco (BAT). Cur­rently RITCO has an in­vest­ment li­cense of US$80mil­lion – US$30 mil­lion go­ing to­wards the cig­a­rette man­u­fac­tur­ing plant and bal­ance of US$50 mil­lion go­ing to the pri­mary pro­cess­ing plant.

“If you com­pare with our com­peti­tor BAT who have in­vested only US$50mil­lion, RITCO is do­ing more. We had an ini­tial in­vest­ment of US$8mil­lion and within 5 years, the com­pany man­aged to se­cure the ad­di­tional in­vest­ment which has now grown to US$80mil­lion,” he said.

Cur­rently, the RITCO plant is lo­cated in Lusaka’s Mak­eni area, and the com­pany is plan­ning on mov­ing to their new plant in the city’s south multi-fa­cil­ity eco­nomic zone be­fore the end of 2018.

Mwenda dis­closed that RITCO is en­gag­ing the Zam­bia Na­tional Farm­ers Union to part­ner in bet­ter­ing the sup­ply of in­puts to to­bacco farm­ers, the fer­til­iz­ers used and crop va­ri­eties as well.

How­ever, to­bacco be­ing an agro prod­uct has de­pen­den­cies and yields are based on fac­tors which are sea­sonal such as the rain fall pat­terns. RITCO will con­tinue to strive to em­power the farm­ers by giv­ing them in­puts and also en­cour­age the setup of more out-grower schemes.

RITCO has part­ners such as Ja­pan To­bacco In­ter­na­tional who are also buy­ing raw to­bacco from the farm­ers and sup­ply­ing in­puts.

When asked on RITCO’s cur­rent ex­port par­tic­i­pa­tion, Mwenda said the com­pany had fo­cused on con­sol­i­dat­ing its po­si­tion on the Zam­bian mar­ket which it has done so suc­cess­fully so far. Plans are un­der­way to start ex­port­ing to Malawi, Congo and Namibia.

“We are in the process of ex­plor­ing the ex­port mar­ket and we have en­gaged some agents who have shown in­ter­est and Zam­bia be­ing sur­rounded by eight neigh­bour­ing coun­tries gives a very good plat­form for all man­u­fac­tur­ing and in­dus­trial com­pa­nies to ex­port,” Mwenda said.

“Man­u­fac­tur­ing goods here in Zam­bia gives a good plat­form to be able to sell at a higher value and cre­ate more forex for the lo­cal econ­omy.”

Mean­while, Mwenda ex­pressed con­cern at the govern­ment’s seem­ing in­abil­ity to sup­port and ef­fec­tively in­flu­ence the lo­cal to­bacco in­dus­try, say­ing that more needs to be done.

“This is an in­dus­try that has sup­ported our fel­low neigh­bours such as Malawi, Mozam­bique, Zim­babwe and Tan­za­nia. The govern­ment needs to push for a lit­tle more in­flu­ence and put in place poli­cies that will sup­port in­creased pro­duc­tion and pro­vide pro­tec­tion es­pe­cially for lo­cal man­u­fac­tur­ers when com­pet­ing with im­ported brands,” he said.

Mwenda said that the lo­cal to­bacco in­dus­try is not be­ing ad­e­quately pro­tected by the govern­ment and there are a lot of elicit and smug­gled cig­a­rettes that are com­ing through the bor­der at much cheaper prices which are not traced or taxed by the Zam­bia Rev­enue Author­ity.

This is ad­verse to lo­cal pro­duc­ers like RITCO which pay quite a sub­stan­tial amount of tax to the govern­ment. Mwenda fur­ther called on the govern­ment to put stricter mea­sures on the im­por­ta­tion of to­bacco and to­bacco prod­ucts and en­sure guar­an­teed pro­tec­tion of the in­dus­try, say­ing the com­pany is ready to work hand in hand with the govern­ment for the bet­ter­ment of the in­dus­try.

Zam­bia has good lo­ca­tion, suit­able soils and weather pat­terns which could eas­ily see the coun­try’s to­bacco pro­duc­tion and ex­port earn­ings ri­val its neigh­bours. The coun­try needs to in­crease its cur­rent pro­duc­tion five times to be able to join the list of top pro­duc­ers within the South­ern Africa re­gion. Zam­bia’s has been pur­su­ing al­ter­na­tive agro di­ver­si­fi­ca­tion to bring down its cur­rent de­pen­dence and ex­po­sure to in­ter­na­tional cop­per prices which cur­rently stand at over 70% for its to­tal forex and ex­port earn­ings.

A to­bacco farm in Zam­bia “If you com­pare with our com­peti­tor BAT with US$50mil­lion in­vest­ment, RITCO has done more with an ini­tial in­jec­tion of US$8mil­lion and within 5 years has se­cured ad­di­tional in­vest­ment to US$80mil­lion,” he said.

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