The Sunday Mail
Brian Chitemba
Government has begun the process of taking over Cottco Holdings, with the Zimbabwe Asset Management Company settling the firm’s US$51 million debt.
Cottco board chair Mrs Cecilia Paradza told The Sunday Mail that the take-over would be finalised at an EGM after Government officials and management met to discuss modalities.
The State – through the National Social Security Authority – holds 22 percent shareholding and now wants a controlling stake to turn the company into a parastatal.
In November 2014, Cottco applied for judicial management, but stakeholders, including creditors – mostly banks – opted for a debt-equity swap.
In preparation for the take-over, the workforce has been trimmed from 400 to 35, with executives like operations head Mr Petros Piki being retrenched.
Sources had suggested Mr Piki was dismissed on allegations of “disrespecting the board by demanding board members’ curriculum vitaes” during his stint as acting MD in October 2015.
However, Mrs Paradza said, “We are working on our annual general meeting and an EGM where issues to do with the Government take-over will be finalised.
“Piki, just like many other workers, was retrenched. There is nothing sinister or peculiar about his case. The point is that the ongoing retrenchment is a strategy to turnaround the company as Government is finalising the take-over. Cottco was top heavy and we are cutting down management numbers.”
For long, Cottco has been under scrutiny following the cotton industry’s all-time production low of 135 000 tonnes.
Poor input support to farmers, unattractive pricing systems and side-marketing are among the major factors that felled the sector. Approaches that have been adopted since privatisation in 1994 include liberalising the sector, accommodating new entrants and promulgation of a new legal framework to control side-marketing.
Enforcement of this framework has, however, caused a number of problems.
In his State of the Nation Address in August 2015, President Mugabe said, “Government will resuscitate Cottco in order to restore viability in cotton farming in Zimbabwe. Government will ensure that cotton, which is largely grown by small-holder farmers, can once more provide a livelihood for over 300 000 households and create jobs for many in the textile industry.
“The same success story that we witnessed in the production of tobacco in the past few years must now happen in cotton.”
