Government takeover of Cottco next month

The Chronicle

Nqobile Tshili, Business Reporter
GOVERNMENT has upped the pace towards assuming controlling stake at the ailing Cotton Company of Zimbabwe (Cottco) by the end of next month and has already started paying $2 billion outstanding for deliveries by cotton farmers across the country.

This follows a Cabinet resolution last year in May where the Government expressed concern over the company’s failure to operate viably resulting in failure to pay farmers on time, which has prompted perennial Treasury bailout.

The State currently owns 37 percent of shares at Cottco and by the end of March it will become the majority shareholder at 51 percent, Lands, Agriculture, Water, Fisheries and Rural Development Minister, Dr Anxious Masuka, has revealed.

According to the minister, Government’s takeover of Cottco will empower the strategic entity to effectively support farmers in the sector and help unlock the wider cotton value chain opportunities.

“Currently, we are not able to support Cottco as we are able to support the Grain Marketing Board because Cottco is not a Government company, it’s a private company,” said Dr Masuka, who was in Matabeleland North province last week to tour critical agriculture projects.

“Government only owns 37 percent of Cottco and by March 31 this year we will be owning 51 percent of Cottco.
“Once the Government becomes the majority shareholder of Cottco, it means we are able to influence the direction of

Cottco and in terms of the Public Finance Management Act, we will then be able to support Cottco directly.”

Dr Masuka said this week the Government will start paying cotton farmers for last year’s produce where they are owed about $2 billion. He said he has also held a meeting with his Finance and Economic Development counterpart,

Professor Mthuli Ncube, and they agreed that the Treasury will be releasing $500 000 weekly to clear arrears to cotton farmers.

Dr Masuka has said that cotton farming should be one of the cash cows for communal farmers hence the

Government was providing them with inputs and paying their dues.

“You can mobilise people and tell them that the President has supported them through the cotton subsidy,” he said.

“Because the cotton market is not viable so in addition to giving them support through cotton inputs, we also pay an additional amount on what Cottco pays. However, that money is late in coming,” said Dr Masuka.

“During the meeting with the Minister of Finance we agreed that the outstanding amounts of $2 billion will now be paid in batches.

“Every week a disbursement of $500 000 will be made on Monday until we pay everyone,” said Dr Masuka.

He said cotton farmers, some of whom were giving up on farming the crop, should return to the fields as there are a lot of incentives.

“We urge everyone to go back to the fields and additionally tell them the good news that the difficulties that we have been having with Cottco will be a thing of the past,” said the Minister.

He said the Government will be importing hybrid cotton seeds to boost production of the plant to make it commercially viable. – @nqotshili

Article Source: The Chronicle

Enjoyed this post? Share it!