The Cotton Company of Zimbabwe Limited (COTTCO) board and management are under intense scrutiny after it emerged that more than US$70 million in funding was allegedly misused within a single year, even as the company failed to meet key financial obligations.
This was revealed during oral evidence presented before a Parliamentary Portfolio Committee on Lands, Agriculture, Fisheries, Water and Rural Development, where Mutapa Investment Fund chief executive John Mangudya said the company had received substantial financial support but remained unable to pay farmers, workers, and creditors.
Mangudya told legislators that COTTCO received approximately US$60 million annually in government-backed input support, with an additional US$11 million disbursed by Mutapa Investment Fund last year to help cover debts.
Despite this, the company reportedly failed to settle obligations amounting to about US$25 million.
“This points to serious financial mismanagement,” Mangudya said, indicating that the board and executive had failed in their oversight roles amid indications of corporate governance lapses and possible financial irregularities.
He further disclosed that of the US$11 million they were given by Mutapa, about US$6.6 million intended for farmer payments was diverted to service bank debts after lenders threatened to attach company assets.
The revelations come as COTTCO has been placed under voluntary corporate rescue following a resolution by its board on April 28, 2026, citing deepening financial distress driven by liquidity constraints, high debt levels, and mounting arrears.
In a statement, the company said the move was made in terms of Section 122 of the Insolvency Act (Chapter 6:07) to allow for restructuring under the supervision of appointed corporate rescue practitioners.
Mangudya defended the decision, describing corporate rescue as a necessary intervention rather than a sign of weakness.
“The process that we have taken is a good one because the corporate rescue practitioner will investigate what was happening,” he said.
“The appointment of a business rescue practitioner does not suspend any investigation or forensic audit.”
He added that the move would help protect the company while enabling a thorough review of its operations and finances.
“By putting the company under voluntary rescue, it means we are protecting COTTCO. We’re not happy with the board and management. It’s not a weakness to go on voluntary corporate rescue, it’s a strength,” Mangudya said.
COTTCO’s board has since appointed Farai Chibisa and Ian Mtetwa of Grant Thornton Zimbabwe as corporate rescue practitioners to oversee the process and implement a turnaround strategy.
The company maintains that it remains viable, citing its asset base, infrastructure, and established market presence, and expressed optimism that the rescue process will stabilise operations and restore production capacity.
However, the scale of the alleged financial mismanagement is likely to intensify calls for accountability, particularly as thousands of cotton farmers remain unpaid and the sector continues to struggle with declining output.
The corporate rescue process is expected to include a comprehensive review of the company’s financial affairs, with Mangudya indicating that any evidence of wrongdoing uncovered during the exercise will be subject to further investigation.
Discover more from Nehanda Radio
Subscribe to get the latest posts sent to your email.
