Mutapa Investment Fund has acquired a 37.1% stake in Cottco Holdings Limited, marking a strategic move in the government’s plan to attract foreign investment and optimize state assets.
The takeover by Mutapa Investment Fund was initiated as part of the Ministry of Finance, Economic Development, and Investment Promotion’s strategy to leverage profitable state entities for foreign investment, aiming to bolster government revenues. This move aligns with the ministry’s broader objective to attract foreign capital, with a target of US$40 billion for infrastructure development.
Under Statutory Instrument 156 of 2023, the government’s 37.1% shareholding in Cottco Holdings Limited, previousMutapa Investment Fund has acquired a 37.1% stake in Cottco Holdings Limited, marking a strategic move in the government’s plan to attract foreign investment and optimize state assets.
The takeover by Mutapa Investment Fund was initiated as part of the Ministry of Finance, Economic Development, and Investment Promotion’s strategy to leverage profitable state entities for foreign investment, aiming to bolster government revenues. This move aligns with the ministry’s broader objective to attract foreign capital, with a target of US$40 billion for infrastructure development.
Under Statutory Instrument 156 of 2023, the government’s 37.1% shareholding in Cottco Holdings Limited, previously held by the Ministry of Finance and Economic Development, has now been transferred to Mutapa Investment Fund.
Cottco Holdings Limited, a significant player in Zimbabwe’s cotton industry, is currently in discussions with Treasury, the central bank, and financial institutions to secure US$6.8 million for settling payments to cotton farmers.
However, the company faces liquidity challenges amid constraints in the local economy, despite having adequate collateral. Cottco managed to settle the majority of its farmer payments but expects to clear outstanding dues by March 31, 2024, using product receipts.
Despite these challenges, Cottco anticipates breaking even for the year ending March 31, 2024, in US dollar terms, leveraging its export activities.
In a move to streamline operations, the Ministry of Lands, Agriculture, Fisheries, Water, and Rural Resettlement announced that the distribution of inputs from the Presidential Inputs Scheme for cotton would now be handled by the Grain Marketing Board. Extension services under the ministry have also been tasked with monitoring cotton production.
Cottco reported a significant increase in cotton intake for the 2023 season, reaching 69,419 metric tonnes, marking a 48% rise from the previous year. However, operational challenges such as erratic power supply delayed ginning processes in the last quarter of 2023.
As of the latest update, a substantial portion of the seed cotton has been ginned, with ongoing efforts to process the remaining stock. Additionally, lint collection, conversion to yarn, and other downstream activities are progressing steadily.
