THE Zimbabwean government is in advanced talks with Cottco Holdings (Cottco) to increase its shareholding in the company, commensurate with its significant contributions to the business.
Currently, the government holds 37,1% shareholding in Cottco. Industry and Commerce Minister Nqobizitha Ndhlovu revealed to businessdigest that state-owned enterprises (SOEs) have historically relied heavily on state resources, resulting in multiple bailouts.
By increasing its stake in Cottco, the government aims to make the company more efficient and financially independent.
“We have been breathing life into Cottco until we got to a point where we had to have a conversation about the shareholding to say that our contributions need to be reflected in the shareholding,” Ndhlovu said.
“I am not too sure where that discussion is at the moment. These institutions have traditionally been heavily dependent on state resources.” Ndhlovu was optimistic that the SOE placed under the Mutapa Investment Fund will perform better and improve their contributions to the economy. Cottco is one of the 30 firms that have been put under the fund.
“But the conversation on state-owned enterprises is very important. For me, I applaud the decision that the government has taken to give them a particular focus, have them create a sovereign wealth fund so that we can see what they are contributing to the country through their contributions to the sovereign wealth fund,” Ndhlovu said.
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“I look forward to a lot of progress under the Mutapa Investment Fund. That is my optimism around the SOEs going forward.”
Cottco interim chief executive officer Rockie Mutenha confirmed the discussions saying they were at an advanced stage. He said the institution was working with the Ministry of Finance and relevant financial institutions to clear farmers’ outstanding debt of US$5,5 million.
“The government is a major shareholder and controls 37,1% of the shareholding through the Mutapa Investment Fund,” Mutenha said.
“The delivered crop has a total value of US$27,8 million. To date, Cottco paid US$22,3 million leaving an outstanding balance of US$5,5 million. Frantic efforts are being made to ensure full liquidation of the amount.”
The debt issue stands in the way of Cottco participating in the 2023/2024 cotton marketing season opened by the Agricultural Marketing Authority (AMA) earlier this month.
AMA CEO Clever Isaya said merchants would only be allowed to purchase seed cotton once they finish paying farmers for deliveries made in the last season and when all grade differential prices have been paid.
“Further, all contractors are directed to buy from their contracted farmers. For this marketing season, AMA shall implement a quota system based on the level of support each contractor provided during the current season. No contractor shall be allowed to buy outside their quota save for self-financed crops,” Isaya said.