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2.3 INFOTAB WORKSHOP, WASHINGTON, September 19-22, 1983 "THE ELEMENTS OF THE INDUSTRY IN ZIMBABWE" by Maurice Rooney TRANSPARENCY 1 Zimbabwe lies in the middle of southern Africa, an island entirely surrounded by land. Zimbabwe is nearly the size of California, and has a population of some 7 1/2 million. TRANSPARENCY 2 Our major crop is flue-cured virginia tobacco, of which we grow from 90 to 100 million kilograms per annum, and of this we export 96%. The crop is produced by some 1,150 growers and is labour intensive (partly for socio-political reasons). We also grow a small burley crop 92% of which is exported. Our tobacco industry employs 91,600 (8.8% of the national workforce), and directly supports some 400,000 eo le. TRANSPARENCY 3 The structure of the tobacco industry in Zimbabwe is illustrated in this diagram. In the public sector, the main complementary elements of the industry are the Ministry of Agriculture and the Ministry of Trade and Commerce. In the private sector, there are three elements - the growers, the trade and the manufacturers. Whereas in most of the countries which you ladies and gentlemen represent the manufacturers are the most significant, due to our very heavy dependence on tobacco exports, the reverse tends to apply domestically in Zimbabwe. Hence the apparent imbalance in the diagram.

2 The Zimbabwe Tobacco Association (ZTA) is officially recognised by government as representative of the flue-cured tobacco growers and the Air-Cured Tobacco Association (ACTA) (a relatively small organisation) as representing the growers of burley and oriental. The President of the ZTA has direct access to the Minister of Agriculture, and also is one of a private sector committee which has periodic meetings with the Prime Minister. ZTA has a staff of 32, headed by Bert Barnard, whom many of you will have met on previous occasions. The ZTA has an annual budget of Z $2.4 million, and is funded in part by a levy on all growers, based on the value of the tobacco which they sell. In addition to levy funds, the ZTA has built up a considerable investment portfolio, which includes a 43% holding in the sole tobacco auction floor, and an effective 5% holding in the local fertilizer industry. A large portion of ZTA's income, nearly Z $1 million is spent on funding the Tobacco Research Board, the Tobacco Training Institute and the Settlement Training Centre. Among other services which the ZTA renders to its members is a hail insurance scheme. The ZTA is a strong, well-managed and efficient pressure group. The trade is represented by the Tobacco Trade Association (TTA) which consists of 27 locally registered merchants of whom 13 are major buyers of tobacco on the auction floor and eight operate packing houses. The TTA is also funded by a levy on its members. The manufacturers comprise BAT Zimbabwe Limited, its wholly-owned subsidiary, Carlton Cigarette Company, and Rothmans of Pall Mall (Zimbabwe) Limited. The Tobacco Marketing Board (TMB) does not market tobacco. It controls the sale of tobacco on the auction floor. It is funded equally by the ZTA and the TTA and consists of three grower representa- tives and three trade representatives under an independent chairman. In addition to supervising sales on the auction floor, the TMB organises a hessian pool, monitors tobacco for 2501021501

3 pesticide residues, advises on the allocation of rail trucks for export, and issues export permits for tobacco. The foregoing has outlined briefly the basic components of the industry, which have been in existence for a number of years. Discreetly in the corner of the diagram you will notice reference to the Tobacco Industry Council. When Zimbabwe returned to legality and normality in its trading relation- ships, it became clear that a number of changes had taken place in the world tobacco scenario, and that the social, as well as the economic, climate in which tobacco was being sold had changed. It was for this reason, and to find out more about the role and objectives of INFOTAB that Bert Barnard attended the tobacco workshop in 1981. As a result, it was decided to try and bring Zimbabwe into INFOTAB as an Allied Member. In view of the export orientation of the Zimbabwe industry, and the leading role played by the growers' organisation, it was felt that any local form of NMA should include the merchants and the growers. After some 18 months, agreement was reached on a charter and the funding of the organisation, and the Tobacco Industry Council formally established on the lOth February, this year. The exercise took 18 months because, historically, the manufactures, merchants and growers had gone their separate ways, and (in the case of the latter two) regarded each other with mutual suspicion. What had to be achieved was the recognition of a common interest by all the parties while, at the same time, maintaining the identities of the separate interests involved. It was necessary to define the objects and functions of the organisation carefully, so that they did not conflict with the activities and aspirations of the autonomous bodies forming the organisation. Finally, there was a need for equity - a fair allocation of the responsi- bilities and costs in relation to the particular circumstances of the participants. The TIC charter, which is naturally designed to deal with the specific conditions in Zimbabwe, may not be the model generally applicable, but it contains features which could be of interest to member countries wishing to follow suit.

4 TRANSPARENCY 4 The Tobacco Industry Council in Zimbabwe has five constituent members, namely the Zimbabwe Tobacco Association, the Air-Cured Tobacco Association, the Tobacco Trade Association and the two manufacturers. The Council consists of ten - two members from each organisation. In order to emphasise that each sector participates on an equal basis, the Chairmanship revolves every six months, and to obviate any group interests predominating, all decisions are made by consensus. Since the Council only normally meets bi-monthly, provision is made for an executive of five - one from each constituent member, and the chief executive is responsible on a day-to-day basis to the chairman of that committee. This chairman is elected by the committee itself and holds office for one year. The current executive commitee chairman is a manufacturer, and it is likely that he will be succeeded by another manufacturer, in recognition of the fact that the manufacturers play the major role in funding the TIC. TRANSPARENCY 5 The charter makes special provision whereby the manufacturers meet 62.5% of the expenses in equal shares. The ZTA contribute an estimated 30% in kind, that is to say office accommodation, secretarial services, telephone, telex, stationery, etc., and the TTA and ACTA make fixed contributions. These are fixed because neither organisation was prepared to be tied to an open-ended condition. The costs of expenditure on special items, such as the economic impact study, are currently being met by the manufacturers. As can be seen, the split between the individual companies and the remainder of the industry works out at roughly one-third each, although the pro rata contribution by the trade organisation is very much lower than that of the combined growers' organisations. (This is because there is a lingering measure of scepticism in the minds of some merchants as to the value of the exercise.) 2501021503

5 The Tobacco Industry Council in Zimbabwe is now in its shake- down stage. its members are still in the process of identifying where their collective interests lie and adjusting to the concept of taking combined, as opposed to unilateral, action in those areas. However, I think it can be said that there is unanimity in the view that the formation of the TIC has been worthwhile, and that the combination of all the sectors in the organisation gives it a broader base and hence a more secure foundation in Zimbabwe than would have occurred with the formation of a simple NMA. The TIC currently mobilises the basic elements in the industry but it is recognised that much still remains to be done in the recruitment of allies. Suppliers to the industry and merchan- disers are two obvious fields. The immediate priorities of the chief executive have been with the preparation of an economic impact study and to establish a strong liaison with government on a domestic issue upon which time does not permit me to elaborate. The future experience of the TIC will provide further insights into how the various elements in the tobacco industry in one country can find unanimity of purpose and effort. Without a concentrated effort by all those who benefit from the production, sale and manufacturing of tobacco, the full potential of the industry cannot be harnessed to meet the problems that undoubtedly lie ahead.