Source: RBZ relaxes fundraising conditions for cotton merchants – herald
Business Reporter
The Reserve Bank of Zimbabwe (RBZ) has removed the requirement for cotton merchants to seek prior approval before sourcing production and buyback funds from local capital markets.
The central bank’s move is designed to unlock capital for the industry and encourages financial institutions to develop tailored lending products for merchants.
This follows a similar policy for tobacco, which relaxed financing for the country’s largest agricultural export commodity to reduce reliance on offshore loans.
Once among the top foreign currency earners, Zimbabwe’s cotton sector provides a livelihood for over 400 000 families in regions such as Gokwe, Muzarabani and Chiredzi.
However, the industry has struggled over the last decade.
Output fell to a record low of nearly 13 000 tonnes in 2024 due to severe El Niño-induced droughts and a lack of private investment.
Furthermore, the persistent issue of side-marketing—where farmers sell to third parties instead of their contractors—has historically discouraged private companies from entering the market.
Cotton is mainly grown by rural farmers, with the majority (about 85 percent) supported by the Government under the Presidential Cotton Free Inputs Scheme.
Under the scheme, farmers get free inputs including seed, basal and top dressing fertiliser as well as chemicals.
The scheme was launched in 2014 in a bid to boost yields after output plummeted to 28 000 tonnes, the lowest yield in nearly two decades after the 1992 drought.
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