Govt moves to takeover troubled COTTCO
GOVERNMENT has tabled plans to acquire a controlling stake in the troubled Cotton Company of Zimbabwe (COTTCO), in a development likely to change the company’s shareholding structure, if approved.
COTTCO was recently shaken by a wave of allegations of corruption and suspension of its bosses, managing director Pious Manamike and marketing and business development manager, Maxmore Njanji, who are currently appearing at the Harare Magistrates Court.
In a recent notice to shareholders, COTTCO’s company secretary Jacqueline Dube said the move was prompted by the socio-economic strategic position held by the company in Zimbabwe.
“In recognition of the government’s socio-economic objectives in the cotton industry which have been key to the company’s sustainability over the years, shareholders are advised that discussions are currently underway to explore the possibility of the government’s acquisition of a controlling stake in the company.
“The Company shall provide more information in due course once the aforesaid discussions have been concluded,” Dube said.
In 2014 the company applied for voluntary suspension of trading in its shares from the Zimbabwe Stock Exchange following failure to settle debts amounting to US$56 million.
These arose after failure to recover costs of inputs supplied to contracted cotton farmers, due to massive side marketing.
More trouble for detained Cottco bosses; farmers write to ZACC exposing use of company resources for political campaigns
Government intervened through introduction of the Presidential Inputs Scheme (PIS) in 2015 after withdrawal of an application for provisional judicial management by the company.
In 2016, government facilitated the restructuring of COTTCO’s debt through the Zimbabwe Asset Management Company (“ZAMCO”).
In support of the PIS and in order to buttress viability, the GoZ introduced a cotton subsidy scheme in terms of which ZWL$1,5 billion and ZWL$2,5 billion were committed in 2020 and 2021 respectively.
The efforts invested saw cotton productivity reaching 132 000 tonnes last year before a poor rains induced drop to about 116 000 tonnes this year.
At its peak, Zimbabwe produced 352 000 tonnes of cotton, also referred to as “white gold” in 2012.-newzimbabwe
