Online Reporter
Edgar Vhera
Specialist Writer – Agribusiness
THE Cotton Company of Zimbabwe has initiated processes to place the organisation under corporate rescue and appoint a corporate rescue practitioner.
This comes as the 2026 cotton marketing season dawns to a close this month.
A corporate rescue is a formal, legal process aimed at rehabilitating a company in financial distress and saving it from insolvency.
It provides a momentary, structured framework for an ailing business to streamline and manage its operations and debts to return to solvency.
A qualified, independent corporate rescue practitioner (CRP) is appointed to take over management of the company from the existing board and directors.
Cottco board chair, Mr Sifelani Jabangwe, said the process of putting the entity under corporate rescue was aimed at strengthening it, adequately capitalising the business and restructuring its model for the organisation to continue playing a critical role in achieving Vision 2030.
“Since 2016, when Cottco’s resuscitation was supported by the Government, Cottco has had a weak balance sheet such that it required guarantees to secure loans to fund annual cotton crop cycles.
“Legacy debts further accrued as a result of El Niño drought of 2024, where the national cotton crop production dropped to its record lowest of about 12 000 tonnes with Cottco’s intake at 9 900 tonnes,” he said.
Mr Jabangwe said this intake was below the break-even volume for the organisation, resulting in accrued debts. To clear these legacy arrears, Cottco needed to undertake a capital raising exercise.
“This process was delayed due to the backlog in audited accounts, which occurred between 2015 and 2019 when Cottco did not have a board.
“The accounts have now been updated to 2023 with 2024 and 2025 accounts expected by September 2026,” he added.
Mr Jabangwe said that although this process was only six months from completion, some of the creditors were getting impatient with the organisation and, as such, were seeking to attach its property.
“So, to protect Cottco assets and allow for the capital raising exercise, the board resolved to place the entity under corporate rescue as attachment of its assets would have done harm to the prospects of Cottco and the country at large,” he noted.
When the Presidential Cotton Input Scheme was started in the 2015/16 agricultural season, with the input package of US$28 million as a subsidy to the farmer, Cottco was assigned to administer the initiative.
The proportion of Government to private sector financing of the cotton industry, which started at 65 to 35 percent at the inception of the Presidential Input Scheme, has widened over the years to the current 84 to 16 percent since the 2022/23 season.
An insider privy to the ongoings and who requested anonymity confirmed that the board of directors of Cottco had adopted a resolution to place the company under corporate rescue in terms of the Insolvency Act [Chapter 6:07].
Such resolution took effect on April 28, 2026, which was duly filed with the Master of the High Court and the Registrar of Companies and Other Business Entities.
According to documents seen by insider sources, two individuals had already been appointed as CRPs.
A copy of the board meeting minutes held on April 29 read: “The company is financially distressed as it is struggling to meet its obligations to creditors as and when they fall due for payment. The challenges are driven primarily by severe liquidity constraints, lack of working capital, high debt and delayed farmer payments. These issues have resulted in substantial arrears to farmers, declining production and reliance on state-backed input schemes for survival.”
Cottco is a subsidiary of Mutapa Investment Fund (MIF).
MIF, the country’s sovereign wealth fund, has an expansive portfolio under its wings, including NetOne, National Railways of Zimbabwe, ZimRe Holdings, Zimbabwe Power Company, Powertel, Allied Timbers, Telecel Zimbabwe, Air Zimbabwe and Industrial Development Corporation, among others.
Last year, MIF pledged to clear Cottco Holdings’ legacy debts, totalling approximately US$5 million, over six months.
Cottco’s debt clearance was expected to restore its financial stability, facilitate the streamlining of its operations and bolster confidence across the cotton industry.
Cottco is the largest cotton contractor in the country.
Agriculture, Mechanisation and Water Resources permanent secretary, Professor Obert Jiri, also confirmed that Cottco had been placed under CRP, but allayed farmers’ fears that this would affect the 2026 cotton marketing season, which starts this month.
Meanwhile, the 2025/26 Crop, Livestock and Fisheries Assessment report 2 (CLAFA 2) revealed that cotton production increased 26 percent, driven by area expansion to 154 938 hectares in the 2025/26 season from 122 493 in 2024/25 season.
The Presidential Input Scheme targeted 520 000 households for cotton.
A tracker for farmer utilisation of inputs will ensure the gradual conversion of the Presidential Cotton Scheme to a fully recoverable scheme by 2027.
