TOBACCO PAYMENT SYSTEMS BY FELIX THOLE - TOBACCO ASSOCIATION OF MALAWI

TOBACCO INDUSTRY SEMINAR

SUN ‘N’ SAND HOLIDAY RESOLT(9TH – 10TH SEPTEMBER, 2013)

TOBACCO PAYMENT SYSTEMSBY

FELIX THOLE - TOBACCO ASSOCIATION OF MALAWI

• Preamble• Payment period Analysis• Bank Exchange Rate• Merchant/Bank Loan Common Account• Withholding Tax• Dollar payment• Conclusion

PRESENTATION SUMMARY

Paper discusses payment challenges before and after tobacco sales

Payment forms include remittance to market provider, sales proceeds to growers, grower refunds ( O/D, D/D, WHT), loan recovery, due payments to stakeholders, payment to transporters, etc

Agents include, merchant, Market provider, commercial banks, grower association, MRA, transporters, etc

Presentation for thought provoking and seeks your input for a redress

1. PREAMBLE

• 2.1 NORMAL PAYMENTS

• 2.1.1 PRESENT SCENARIO• 2.1.2 EXPECTED/IDEAL SCENARIO

• 2.2. OTHER PAYMENTS• (PRESENT SCENARIO AND EXPECTED/IDEAL

SCENARIO)

2. PAYMENT PERIODS ANALYSIS

2.1.1PRESENT SCENARIO

???

2.1.2 EXEPECTED/IDEAL SCENARIO

???

2.2 OTHER PAYMENTS

Inconsistence between selling day and payment day Exchange rate not displayed on seller sheet

3. BANK EXCHANGE RATE

4. MERCHANT/BANK LOAN COMMON ACCOUNT

Remittance delays after full repayment (Months) Inconsistent deductions Deductions on non beneficiaries

Most small farmers not keeping farming transactions Many profit margins below tax deduction threshold Therefore suffer in silence Refunds take months or years 3% deemed high

6. DOLLAR PAYMENT• Problems in proceeds share out for club members

5. WITH HOLDING TAX

• Industry must address the challenges to ensure removal of the inequities along the tobacco value chain.

• Your input is welcome

6. CONCLUSION

THANK YOU ALL FOR YOUR ATTENTION