Harare, Zimbabwe – The Cotton Company of Zimbabwe Limited (COTTCO) is facing intense scrutiny following revelations of alleged misuse of over US$70 million in funding within a single year, even as the company grapples with significant financial obligations. These alarming details emerged during oral evidence presented before a Parliamentary Portfolio Committee on Lands, Agriculture, Fisheries, Water and Rural Development.
John Mangudya, Chief Executive of the Mutapa Investment Fund, informed legislators that COTTCO had received substantial financial backing but remained unable to remunerate farmers, employees, and other creditors. Mangudya testified that COTTCO annually received approximately US$60 million in government-backed input support. Additionally, the Mutapa Investment Fund disbursed an extra US$11 million last year specifically to assist COTTCO in settling its debts. Despite this considerable financial injection, the company reportedly failed to meet obligations totaling around US$25 million.
“This points to serious financial mismanagement,” Mangudya stated, suggesting a failure in oversight by both the board and executive. He highlighted indications of corporate governance lapses and potential financial irregularities. Further disclosures by Mangudya revealed that approximately US$6.6 million of the US$11 million provided by Mutapa, originally earmarked for farmer payments, was diverted to service bank debts. This diversion occurred after lenders reportedly threatened to seize company assets.
The gravity of these revelations is underscored by COTTCO’s recent decision to enter voluntary corporate rescue. The company’s board passed a resolution on April 28, 2026, to initiate this process under Section 122 of the Insolvency Act (Chapter 6:07), citing severe financial distress stemming from liquidity constraints, high debt levels, and accumulating arrears. This move aims to facilitate restructuring under the guidance of appointed corporate rescue practitioners.
Mangudya defended the decision to place COTTCO under corporate rescue, framing it as a necessary strategic 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 explained. He further emphasized that the appointment of a business rescue practitioner would not impede any ongoing investigations or forensic audits. According to Mangudya, this measure will safeguard the company while enabling a comprehensive review of its operations and financial health. “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,” he asserted.
In line with the corporate rescue process, COTTCO’s board has appointed Farai Chibisa and Ian Mtetwa of Grant Thornton Zimbabwe as the corporate rescue practitioners. Their mandate includes overseeing the process and implementing a viable turnaround strategy. COTTCO maintains its viability, citing its substantial asset base, infrastructure, and established market presence, expressing optimism that the rescue process will stabilize operations and restore production capacity.
However, the magnitude of the alleged financial mismanagement is expected to intensify demands for accountability. This is particularly pertinent given that thousands of cotton farmers remain unpaid, and the sector continues to struggle with declining output. The corporate rescue process is anticipated to include a thorough examination of the company’s financial affairs, with Mangudya indicating that any evidence of wrongdoing uncovered will be subject to further investigation.
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