New tobacco firm invests US$8m in local cigarette production

A NEWLY opened tobacco company,  Roland Tobacco,  has invested US$ 8 million for the local production of cigarettes, says division  general manager Aliport Ngoma.

Mr Ngoma said apart from that, the company has set aside $20 million for the expansion of the primary tobacco processing plant that would be set up in the Lusaka South Multi Facility Economic Zone (LS-MFEZ) following the signing of a lease agreement with the LS-MFEZ.

He  said currently, Roland Tobacco was capable of producing about two billion cigarettes a year which was about twice the cigarrettes sold in Zambia annually.

Mr Ngoma said his company planned to export cigarettes to the Southern African Development Community (SADC) and COMESA as well as other African markets.

He said the expansion of the processing plant would increase production and that through this investment, the future of the Zambian tobacco farmer would be more assured with such local tobacco processing facilities, which were currently non-existent.

Mr Ngoma said the company was set to establish Zambia’s first primary tobacco-processing plant to manufacture the  “cut rag”, the form of tobacco used in cigarrette production.

He said Zambia produced some of the finest tobacco in the world, but most of it was exported in its unprocessed form.

He said the company was keen to support small-scale farmers through out-grower schemes and setting up own tobacco  joint venture farms.

Mr Ngoma said the new investment in tobacco would result in new income streams coming on board, begining with a farmer, and in the process widening the tax base in Zambia.

He said the high excise duty and lack of separation between locally produced cigarettes and imported ones had caused disinvestment in the local manufacture of cigarettes, adding that it also affected the investments in the upstream tobacco processing infrastructure in Zambia.

He also said the increase by about 145 percent in  excise duty had resulted in the decline of the legal market by a significant amount and a rapid growth of the illegal market which was still growing.

“In some countries where the excise duty on imported cigarettes is lower than in Zambia, the illicit trade or illegal markets is less prevalent, compared to Zambia, and the issue of smuggling of cigarettes is of great concern to us and to our investment in the country,” he said.

He said there were no safeguards provided by the Zambian Government for the farmer and yet tobacco accounted for about 37 percent of the manufacturing Gross Domestic Product in 2012.

“In the 2011/2012 season, there were a total of 3200 tobacco entreprises with about 36,000 hectare planted and  41,314 tonnes of tobacco valued at US$135 million was produced, representing a national GDP contribution of 3percent and an agricultural GDP contribution of 14percent,” he explained.