African Loans – Bungeni Fri, 04 Jun 2021 12:24:11 +0000 en-US hourly 1 African Loans – Bungeni 32 32 Outlook for Africa Finance Corporation’s rating upgraded to stable by Moody’s Fri, 04 Jun 2021 11:11:00 +0000

NEW YORK,–(COMMERCIAL THREAD) – Africa Finance Corporation, the leading provider of infrastructure solutions in Africa, received an increase in its credit rating outlook from Moody’s Investors Service, which assigned a “stable” outlook.

The decision ratifies the second investment grade ranking among African institutions for AFC, with Moody’s upholding the company’s long-term and senior unsecured issuer ratings to A3 and the short-term issuer rating to P-2.

“The stable outlook underscores the resilience of AFC’s credit profile in the face of a significant shock from the Covid-19 pandemic,” Moody’s analysts concluded in a statement. “In light of developments over the past year, Moody’s expects AFC to maintain its intrinsic financial strength, with capital adequacy and strong asset performance, liquidity and funding. ”

AFC’s A3 rating is supported by its intrinsic financial strength, which includes a capital position as measured by its Basel II ratio which rose to 34.1% in 2020 from 32.9% in 2019. AFC’s financing and liquidity exceed the average for comparable A-rated institutions, with a liquidity-to-total assets ratio of 54% at end-2020, compared to 50% for its peers. Despite significantly weaker market conditions, the availability of AFC’s liquid resources increased to 125% of expected cash outflows in 2020, up from 121% in 2019, well above the median of 83% for A rated peers, bolstered by demonstrated access to market funding.

Moody’s decision is critical as AFC leverages its leading credit ratings to achieve the lowest borrowing costs of any institution on the continent and funnels that capital into vital energy infrastructure, transport, telecommunications and natural resources that stimulate local manufacturing and job creation. To date, the Company has invested over US $ 8.7 billion in projects in 35 African countries. Much more is needed: The continent’s worst recession in decades has increased the already substantial infrastructure financing needs, estimated at US $ 130 billion to US $ 170 billion per year.

“The main factor in shifting the outlook from negative to stable is AFC’s demonstrated ability to avoid erosion of its intrinsic financial strength despite the pandemic,” Moody’s analysts wrote in their report. In fact, “the Company’s capital adequacy has increased due to a slight decrease in its leverage ratio.”

Moody’s praised AFC for being “proactive in managing the risks inherent in the projects it finances” – a process which, according to the rating company, will continue until 2021 to deal with the consequences of the pandemic. The report also noted increased asset diversification: AFC’s exposure to the oil and gas sector, for example, has fallen to 18% of the overall portfolio, from 20% in 2019 and nearly 50% five years ago. years.

Investors showed their support for AFC’s business model in April by ordering 3.5 times more than the $ 750 million raised in seven-year Eurobonds at a record yield. The funding is in addition to commitments from an inaugural green bond last year as well as syndicated loans and concessional lines of credit resulting from AFC’s “strong partnerships” with commercial banks and development finance institutions, Moody’s reported. AFC was recently designated as an eligible organization to provide official development assistance through the OECD Development Assistance Committee.

An increase of $ 60 million from new shareholders combined with the issuance of $ 200 million in stock warrants to the Central Bank of Nigeria and a self-contribution of $ 115 million to reserves from profits of AFC in 2019 exemplify strong and continued stakeholder support, Moody’s said.

“Amid the unprecedented challenges for the development of our continent from Covid-19 and its consequences, it is gratifying to receive such strong support for our strategy and to maintain the confidence of a key lever in our access to global capital markets, ”Samaila Zubairu, AFC President and CEO, responded. “My thanks to the AFC team for their hard work and focus on updating AFC’s mandate to reduce Africa’s infrastructure deficit. We will continue to seek ways to accelerate development impact by creating jobs for young Africans seeking opportunities for better livelihoods. ”

For Moody’s full statement, please click here. Moody’s changes AFC outlook from negative to stable; confirms A3 notes

About AFC

AFC was established in 2007 to be the catalyst for private sector led infrastructure investments across Africa. It is the second highest rated multilateral financial institution in Africa. AFC’s approach combines specialized industrial expertise with a focus on financial and technical advice, project structuring, project development and venture capital to meet Africa’s infrastructure development needs and stimulate a sustainable economic growth.

AFC invests in high quality infrastructure assets that provide essential services in the basic infrastructure sectors of energy, natural resources, heavy industry, transport and telecommunications. To date, the Company has invested over US $ 8.7 billion in projects in 35 African countries.

Follow us on Twitter – @africa_finance

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The Latest: Arizona State-Managed Vaccination Sites Closed | national news Thu, 03 Jun 2021 22:13:30 +0000

Doctors at hospitals treating COVID-19 patients around the state cannot remember a single death of a vaccinated person. Yet health officials are struggling to convince certain groups to get vaccinated, especially young people and minorities.

Hispanic and black residents continue to be hospitalized at disproportionately high rates, according to state health officials.

Hispanics make up about 20% of the state’s population, but in recent weeks they made up about 28% of those hospitalized. Black residents make up nearly 4% of the state’s population, but have been hospitalized in recent weeks at double that number.

OLYMPIA, Washington – Washington is the latest state to offer prizes to encourage people to get vaccinated against COVID-19, with Governor Jay Inslee announcing a series of giveaways during the month of June on Thursday that includes lottery draws totaling $ 2 million, college helps with tuition, plane tickets, and gaming systems.

The incentive program, called “Shot of a Lifetime,” ends June 30 and applies to those who begin the vaccination process this month as well as residents who have already been vaccinated.

Washington joins several other states – including California, New Mexico, Ohio and Oregon – that have already established lotteries in hopes of speeding up the pace of vaccination, which has slowed in recent weeks.

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On the occasion of Africa Day, Casablanca Finance City (CFC) tackles preconceived ideas on the continent Thu, 03 Jun 2021 07:33:00 +0000

Casablanca, Morocco – (COMMERCIAL THREAD) – Casablanca Finance City (CFC) (, the leading financial center in Africa, celebrates Africa by producing a web-TV program, CFC Talks – Special Africa Day (https: // / 3vMGMl0), to fight against preconceived ideas on the continent and raise awareness of its potential by offering a positive outlook on African realities, without however ignoring the challenges facing Africa.

“The transformation Africa has undergone over the past decades has been remarkable. In Casablanca Finance City, we want to play our part to change the story ”, said Mr. Said Ibrahimi, CEO of CFC, whose community includes more than 200 member companies.

Aimed at a continental and international audience and posted online Tuesday, May 25, CFC Talks – Special Africa Day ( gave the floor to a panel of experts and investors. These “African believers” provided insight into their successes in Africa and the continent’s potential for digital transformation, infrastructure and financing for sustainable growth.

Describing the success of mobile payment in Africa, Mr. Lacina Koné, Managing Director of Smart Africa, highlighted the continent’s decisive contribution in this area: “In Africa today we own about 63% of mobile money. Mobile payment originated in Africa in the context of Africa and dominates the world today. This demonstrates the capacity of the countries of the South to set an example for those of the North. “

Commenting on Africa’s priority infrastructure needs, Mr. Raza Hasnani, Managing Director, Head of Infrastructure Investments at Africa50, said: “Infrastructure should be a key component of any post-pandemic recovery program. Given the limited resources of governments, attracting capital from the private sector is essential to bridge the financial gap. “

The future of Africa after the crisis was at the heart of the discussions. “During the pandemic, the African Union brought together the continent’s heads of state and finance ministers every week to jointly shape the new framework to raise more funds and define our needs. What we are celebrating is the start of United Africa Day, Africa Day is United Africa Day ”, said Lionel Zinsou, former Prime Minister of Benin and co-founder of SouthBridge Group.

Link to watch the full show:

Distributed by APO Group for Casablanca Finance City (CFC).

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About FCAC:

Casablanca Finance City (CFC) is an African financial and business center committed to the future of the continent. CFC is ideally located and equipped to connect with other business centers and markets around the world.

CFC provides a stable environment, localized expertise and a support network to access Africa’s opportunities while alleviating its complexities.

The 200 members of the CFC operate in 50 African countries from Casablanca, in a warm welcome, a Mediterranean coastal climate and exceptional natural beauty.

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Salah and Aina among Premier League goal of the season nominees Tue, 01 Jun 2021 18:43:54 +0000

The goals of the Egyptian and Nigerian stars were shortlisted for the annual distinction of the English elite division

Goals from Mohamed Salah and Ola Aina have been nominated for the Premier League goal of the season award.

Salah played a crucial role in Liverpool’s third place in the English elite division – scoring 22 times with five assists – to come second behind Golden Boot winner Harry Kane.

Nonetheless, his effort against West Ham United will face eight other players for the tiara goal of the season.

In the 3-1 defeat of David Moyes’ men, the Egyptian found the net twice. However, his second effort made the cut.

Trent Alexander-Arnold found Xherdan Shaqiri rushing down the left wing before the Swiss player hit a precise ball for Salah. The African two-time player of the year first touch was exquisite, and he drank it in front of goalkeeper Lukasz Fabianski.

This effort faces stiff competition from Aina’s beauty against West Bromwich Albion on November 2, 2020.

Beautiful exchanges between Aleksandar Mitrovic and Bobby Decordova-Reid saw the first set up the Turin lender. He then thundered his left footed thunderbolt into Sam Johnstone’s upper left corner from the edge of the area.

Also in contention are James Maddison’s strike against Manchester City, Manuel Lanzini’s goal for West Ham in the 3-3 draw with Tottenham Hotspur and Sebastien Haller’s lavish effort against Crystal Palace.

Bruno Fernandes ‘goal against Everton, Edinson Cavani’s stunner against Fulham, Jesse Lingard’s effort against Wolverhampton Wanderers and Erik Lamela’s lone goal in Spurs’ 2-1 loss to Arsenal complete the list.

The goal with the most votes will go home with the individual distinction at the end of season dinner.

Ola Aina

Aina has played 31 league games for the Craven Cottage Giants, but Scott Parker’s side have been demoted to English second tier.

In a conversation with The Fulham site, the 24-year-old said he enjoyed his time at the London club.

“I loved it,” he says. “A lot of people ask me this question all the time, and although we’ve been relegated, I’ve loved every minute of this season.

“I loved the challenge, the coaching staff, my teammates and I also loved the club. I loved this club, it’s a very nice club.

“The club has become a part of me and all the other players on loan, and I think you can see that.

“Even though we’re here on loan, we’re all part of the same fight. I really think the lenders have risen to the challenge.

“Off the pitch we’ve always been very close to each other. We like each other’s company, so it’s a great group.

“We really care about this season and how we’ve done it. It went wrong, but trust me, we really care. “

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Two Ethiopian projects show ‘railpolitik’ in action Tue, 01 Jun 2021 03:31:07 +0000

Ten years ago, when late Ethiopian leader Meles Zenawi planned 5,000 km of standard gauge railway, the landlocked country got a $ 2.5 billion loan from China Eximbank. This loan was linked to the construction of an 800 km east-west railway line between Addis Ababa, the capital, and the port city of neighboring Djibouti. It would be built by Chinese engineers and would use Chinese locomotives.

Then, in 2013, the Ethiopian government signed an engineering and supply contract for another line. This one was intended to travel roughly the same distance from south to north, between the central city of Awash and Mekelle, capital of the now war-torn Tigray region. The contractor was Turkish construction group Yapi Merkezi, which helped negotiate $ 1.1 billion in financing from Turkish bank Eximbank, Credit Suisse and European export credit bureaus.

And the two lines now offer the possibility of comparing the main infrastructures of Chinese and non-Chinese companies in the same African country.

“Both projects have had a bit of a bumpy road,” says Yunnan Chen, an expert on Chinese investments in Africa and author of a policy brief on what she calls “railpolitik” for the Africa Research Initiative. China at Johns Hopkins University. “There will always be starting problems.” Regarding the Chinese line in particular, she adds, “It was completely imported technology that was very well established in China, but Ethiopia has never built a standard gauge railway like this.

Making connections: Chinese workers on the railway line between Djibouti and Addis Ababa © AFP via Getty Images

Funding has made a big difference. When Ethiopia encountered problems servicing its debt due to a continuing shortage of foreign exchange, the Chinese were flexible, says Chen. On the other hand, penalties have been incorporated into European loans in the event of late repayment. In 2018, China granted Ethiopia a one-year moratorium on debt service. Abiy Ahmed, Prime Minister, subsequently negotiated an extension of the repayment period from 10 to 30 years.

But there was a price for such flexibility. While the Turkish project left Ethiopia to choose its own project manager and gave her more influence in negotiating the transfer of technology, under the Chinese project she was forced to hire China International Engineering. Consulting Corporation and training “fell short of expectations,” Chen observes.

China offered to teach engineering students in Tianjin and Chengdu, but on-the-job training in Ethiopia was sacrificed to complete construction on time, local officials said. Post-construction training was better – with instruction on locomotives, driving, signaling and electrical engineering, Chen says. But this was hampered by language issues as few Chinese instructors spoke English.

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Turkish group Yapi Merkezi, on the other hand, used English as a working language and trained 40 Ethiopian Railways employees locally, hiring many for the second phase.

However, neither of the two railroads went fully as planned. Yapi Merkezi completed its section of the line in 2019, but a second section of Wediya in Mekelle was blocked due to lack of funding.

The Addis-Djibouti line, completed in 2018, has been plagued by electricity problems, in part because Ethiopia insisted it be electrified. As a result, Ethiopian exporters in the industrial zone, put off by the sporadic service and the high cost of getting goods the last mile to the railroad, did not use it as much as expected.

The electrified line from Djibouti to Addis Ababa
Rail and road: the electrified line between Addis Ababa and Djibouti © Alamy

Aboubaker Omar Hadi, president of the Authority of Ports and Free Zones of Djibouti, affirms that the lack of rolling stock also hinders the success of the railway: “The cargo is there, the business is there, [but] the road takes the largest share, with 2,000 trucks in one day. “

Some of it may be inevitable, Chen says. Yet, she concludes, governments must do better to integrate construction projects into their local economies. They also need to build their technical capacity and become smarter to ensure that when entrepreneurs pack their bags and leave, countries are left with exactly what they expected.

Additional reporting by Andres Schipani in Djibouti

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Feasibility of Renewable Energy in Ethiopia by Analyzing Financing Options | Mon, 31 May 2021 09:05:26 +0000

Featured Image: Stock

RES4Africa and BonelliErede recently discussed project finance, mitigation tools and more in an online meeting focused on Ethiopia and its renewable perspectives.

BonelliErede, an international law firm, together with the RES4Africa Foundation, an organization dedicated to promoting renewable energy in Africa, addressed the management of bankability issues regarding renewable energy projects in Ethiopia with government counterparts.

Did you read?
Ethiopia: Exploring electrification opportunities in agriculture

The conversation covered important points, including the key factors of project finance, potential risks and mitigation tools. Participants spoke at length about the potential of renewable energy to tackle climate change and Ethiopia’s lack of energy security, in addition to the government’s willingness to embrace the transition from biomass to more sustainable alternatives.

Duncan Keil, Managing Partner of Africa FX led the discussion which involved Riccardo Bicciato, Partner at BonelliErede, and Matteo Cavadini, Head of Business Development in East and West Africa – Enel Green Power.

Riccardo Bicciato touched on several points in his presentation, including:

  • How the cost of capital remains a crucial element in every renewable energy investment decision and can significantly influence a project’s business case
  • Describing the various risks associated with the pre-construction and construction / operation phases, such as legal and regulatory frameworks, land permits with the former and environmental, political and financial risks with the latter
  • The best approach to mitigate these risks, the basic approach being to share the burden between the parties who are best placed to manage them effectively.
  • Why not allocating risks correctly can have serious consequences ranging from deterioration of the terms and conditions of the financing, increase in overall expenses, delay or outright cancellation of the project

Matteo Cavadini, followed by an overview on:

  • Macro-country factors that impact on the bankability of projects, such as a stable political environment, well-defined energy policies, a sound financial structure, and clear legal and regulatory frameworks
  • Appropriate bidding processes for projects, such as allowing only reputable bidders to be involved without any stowaways or speculative bidders, no material changes to the bidding process before or after the bid date attribution, tight deadlines and sound governance of the entire process
  • The need for Ethiopia to have a comprehensive renewable energy plan and roadmap to meet targets, in addition to more independent bodies that can support government in procurement procedures

Did you read?
First drilling of the 150 MW Tulu Moye geothermal project completed

The future of Ethiopia’s renewable energy

The closing speech was delivered by Antonio Passero, Sub-Saharan Program Manager at the RES4Africa Foundation, who stressed the importance of private sector work with the Ethiopian government to make renewable energy projects a reality in the country. .

During the webinar, Riccardo Bicciato said: “Ethiopia has embarked on a bold journey by announcing its Climate Resilient Green Economy (CRGE) strategy, with the goal of making the nation a climate resilient green economy here. 2025.

“The significant opportunity for renewable energies to be a key pillar of this plan is clear, but the project funding issues associated with such projects pose a threat to their viability. At BonelliErede, we remain committed to advising clients on how to overcome these barriers through practical mitigation measures. We firmly believe that together with private lenders and major energy players, we can help Ethiopia make the most of its natural resources and ensure the energy security of its people for years to come.

“Ethiopia has enormous potential in terms of photovoltaic, hydroelectric, geothermal and wind power.” commented Roberto Vigotti, Secretary General of the RES4Africa Foundation “Exploiting the renewable resources of this country is the strategy to pursue and guarantee its sustainable development. The public and private sectors play a crucial role in this process and the promotion of this type of synergies is at the heart of the work that RES4africa carries out with its partners.

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ICC Prosecutor Urges Sudan To Hand Over Darfur Suspects | Voice of America Sun, 30 May 2021 16:33:28 +0000

CAIRO – The International Criminal Court prosecutor on Sunday urged the transitional government of Sudan to hand over suspects wanted for war crimes and genocide in the conflict in Darfur, the official Sudanese news agency reported.

ICC Prosecutor Fatou Bensouda arrived in Sudan’s West Darfur region on Saturday to meet with authorities and affected communities in the region, the court said. Bensouda said she was inspired by the “resilience and courage” of the people of Darfur.

FILE – International Criminal Court prosecutor Fatou Bensouda gives a press conference in Khartoum, the capital of Sudan, on October 20, 2020, following her five-day visit to the country.

Among those wanted by the international court is former Sudanese President Omar al-Bashir, who has been in prison in Khartoum since his ouster in April 2019 and faces several trials in Sudanese courts linked to his three decades of authoritarian rule. .

Conflict in Sudan’s Darfur region erupted when rebels from the territory’s Central and Sub-Saharan African ethnic community launched an insurgency in 2003, complaining about the oppression of the Arab-dominated government in Khartoum.

Al-Bashir’s government has responded with a campaign of airstrikes and raids by militias known as the Janjaweed, who are accused of massacres and rapes. Up to 300,000 people were killed and 2.7 million were driven from their homes.

The ICC has charged al-Bashir with war crimes and genocide for allegedly orchestrating the campaign of attacks in Darfur. Sudanese prosecutors launched their own investigation into the conflict in Darfur last year.

Also indicted by the court are two other senior officials of al-Bashir’s reign: Abdel-Rahim Muhammad Hussein, Minister of the Interior and Defense during much of the conflict, and Ahmed Haroun, a security chief in then and later the leader of Bashir’s ruling al-Party. Hussein and Haroun have both been under arrest in Khartoum since the Sudanese army, under pressure from protesters, ousted al-Bashir in April 2019.

The court also indicted rebel leader Abdulla Banda, whose whereabouts are unknown, and leader Janjaweed Ali Kushayb, who was indicted last week with crimes against humanity and war crimes.

Bensouda and his team met with the Governor of Darfur, Mini Arko Minawi on Saturday, who said the prosecutor’s main concern was to hand over those wanted by the court as quickly as possible and to speed up Haroun’s transfer since his case is linked. to that of Kushayb. .

In a Sunday meeting with officials in North Darfur province, the ICC prosecutor said they would continue to demand from the government the surrender of all those wanted by the court, SUNA reported.

Sudan’s transitional government, which has pledged democratic reforms and is led by a mix of civilian and military leaders, has previously said war crimes suspects, including al-Bashir, will be tried before the ICC, but the Place of trial is a matter of negotiation with the Hague-based Tribunal.

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IMF agrees to provide $ 1.5 billion loan to DRC Sat, 29 May 2021 03:31:44 +0000

The staff of the International Monetary Fund have agreed to provide $ 1.5 billion to the Democratic Republic of the Congo over the next three years, likely securing the country’s first official lending program with the lender since 2012.

The agreement, which has yet to be definitively approved by IMF management and its board of directors, will mark the end of two years of negotiations between the DRC and the IMF. It is a major victory for President Felix Tshisekedi as he seeks to implement his political agenda after winning a power struggle with allies of his predecessor, Joseph Kabila, for control of the government.

The extended credit facility is expected to help the country emerge from the Covid-19 pandemic and reduce poverty, the IMF said.

“The program aims to create fiscal space for much needed social spending and investment, strengthen the monetary framework and financial supervision, and improve economic governance and transparency,” said Mauricio Villafuerte, IMF chief of mission for the DRC, in a statement sent by email.

The new program could unlock billions of dollars in additional funding from the World Bank and other donors, who use an official IMF program as an indicator of the government’s commitment to fiscal discipline. The IMF financing comes with conditions such as reforms to the central bank and the value-added tax system, and more transparency in the mining industry, the Washington-based lender said.

The DRC is the largest producer of copper in Africa and the largest source of cobalt in the world. Mining provides almost all of the country’s export earnings. The IMF halted its last lending program with the country at the end of 2012 over concerns over corruption in the industry, after the government refused to release a contract for a copper deal involving M’s family. Kabila.

“Improving governance and fighting corruption are essential, with a continued focus on the management of extractive resources, on improving public finance management and on combating money laundering,” said said Mr. Villafuerte.

The DRC’s economy is expected to grow 4.9% in 2021 as the country emerges from the pandemic and benefits from high copper and cobalt prices, the IMF said. The economy grew only 1.7% last year, he said.

Finance Minister Nicolas Kazadi did not immediately respond to a request for comment.

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IFC and development groups help finance vaccine production in Africa Fri, 28 May 2021 20:45:00 +0000

FILE PHOTO: A woman holds a small bottle labeled with a “COVID-19 Coronavirus Vaccine” sticker and medical syringe in this illustration taken October 30, 2020. REUTERS / Dado Ruvic / File Photo

(Reuters) – Global development groups including International Finance Corp (IFC) have said they will consider helping African producers such as Aspen Pharmacare Holdings Ltd boost vaccine manufacturing in Africa, which has received relatively little of COVID-19 vaccines produced by rich countries.

The news comes after the European Union last week pledged € 1 billion ($ 1.22 billion) to build vaccine manufacturing centers in Africa. French President Emmanuel Macron also pledged on Friday to help the continent produce more vaccines locally.

IFC partners, including the US International Development Finance Corp (DFC), Proparco and the German development finance institution, said they would provide financing to manufacturers to strengthen vaccine production capacity, develop skills techniques and allow knowledge sharing.

The funding is intended to help Africa respond to COVID-19 and future pandemics, but no timeline has been specified for the effort.

Some 1.53 billion doses of the COVID-19 vaccine have been administered worldwide, but only about 1% of them in Africa, according to recent data from the World Health Organization.

“Increasing vaccine production in Africa for Africa will save lives and diversify the global vaccine supply chain,” said David Marchick, COO of DFC.

(1 USD = 0.8201 euros)

Reporting by Amruta Khandekar; Edited by Shounak Dasgupta

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Tobacco pays off in Zimbabwe, but growers talk about debt Thu, 27 May 2021 21:55:20 +0000

Zimbabwean farmers are growing tobacco again. But some say it’s the lenders who profit from farmers’ debt.

Rosemary Dzodza is a small farmer who recently traveled 200 kilometers to the capital, Harare. She brought her tobacco crop for what she hoped would be a profitable day.

But the 60-year-old farmer ended up sleeping outdoors for two weeks while awaiting payment. When the money arrived, it was only a small portion of what his tobacco was selling later.

She was angry. “My tobacco sold for $ 7,000, but I only get home for less than $ 400,” she says. The rest of the money went to the Merchant who had given him a loan to pay for fertilizers, seeds, labor, firewood and goods for his house.

A tobacco farmer patiently waits for his tobacco crop to be auctioned in Harare on Thursday, April 8, 2021.

Dzodza had to repay the loan with interest and sell his crop to the merchant at a fixed price. The merchant then sold the tobacco to the highest tenderer in a public sale. Often the highest price is paid by buyers who export the crop to China.

Tobacco has been a profitable crop in Zimbabwe for over 60 years. White farmers took advantage of this during this period. When supporters of former President Robert Mugabe began to violently take over white-owned farms, tobacco production plummeted. The tobacco harvest increased from 260 million kilograms in 1998 to 50 million kilograms in 2008.

Since then, tobacco production by black farmers has increased. The number of black growers, mostly on small farms, has grown to more than 145,000. Experts estimate this year’s tobacco crop will be 200 million kilograms. This is an increase from 180 million kilograms last year.

Zimbabwe’s banks provided loans to white farmers for tobacco cultivation. But the banks pulled out years ago because the government didn’t provide acts to black farmers on land once owned by whites. Deeds are documents that show ownership of land or property.

Merchant loans helped black farmers get involved in the tobacco industry. The demand started with Chinese buyers. But now many Zimbabwean traders want to take advantage of it.

Tobacco auctioneers inspect the tobacco crop ahead of an auction in Harare on Thursday, April 8, 2021.

Tobacco auctioneers inspect the tobacco crop ahead of an auction in Harare on Thursday, April 8, 2021.

The Tobacco Market Industry Council oversees the tobacco industry in Zimbabwe. It indicates that 96 percent of tobacco growers were financed through loan contracts. This year, the Tobacco Industry Marketing Board released 20,000 farmers from contracts with traders.

Many say this system has helped Zimbabwe revive the tobacco industry and become the largest producer of the crop in Africa. But many black farmers say the merchants make them poor.

George Seremwe is the president of the Zimbabwe Tobacco Association. He said farmers are always in debt because as soon as they pay off one loan, they have to take another. “Year after year they are in debt,” he said.

He said some farmers are losing animals, their only wealth, to merchants after failing to repay their loans due to poor harvests.

A study published in the publication Tobacco Control found that more than 90% of tobacco farmers want to end their contracts but cannot find other ways to raise money. The study found that nearly 60 percent of farmers said they were in debt.

Tobacco farmers prepare to sleep in auction rooms in Harare on Wednesday April 14, 2021.

Tobacco farmers prepare to sleep in auction rooms in Harare on Wednesday April 14, 2021.

Economist John Robertson said the problem is that farmers who have taken over land from white people are unable to borrow from banks. He said the banks feared that if a farmer did not repay a loan, they could not sell the farmer’s land to cover the cost because ownership of the land was unclear.

The government says the answer lies in the state-owned land bank, established in April. He said the bank would loan farmers money for their tobacco crops at lower interest rates.

Not everyone is sure this will work. Farmers like Dzodza say they may have to continue contract farming.

I am Jill Robbins.

Farai Mutsaka reported this story to The Associated Press. Gregory Stachel adapted it for VOA Learning English. Mario Ritter, Jr. was the editor.


Words in this story

Merchant not. someone who buys and sells goods especially in large quantities

tenderer -NOT. a person who offers to pay a fixed price for something that is sold in a public auction (usually the item is sold to the highest-priced bidder)

act not. a legal document that shows who owns a building or land

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