US$70 million down the drain as Mangudya gives brutal assesment of COTTCO’s mismanagement
MUTAPA Investment Fund (MIF) Chief Executive Officer (CEO) John Mangudya has offered a brutal indictment of the mismanagement at the Cotton Company of Zimbabwe (COTTCO), which is financially bleeding despite the government sinking in excess of US$70 million. COTTCO was recently placed under a corporate rescue practitioner by the board in a bid to pluck […] The post US$70 million down the drain as Mangudya gives brutal assesment of COTTCO’s mismanagement appeared first on NewZimbabwe.com.
Black News 
MUTAPA Investment Fund (MIF) Chief Executive Officer (CEO) John Mangudya has offered a brutal indictment of the mismanagement at the Cotton Company of Zimbabwe (COTTCO), which is financially bleeding despite the government sinking in excess of US$70 million.
COTTCO was recently placed under a corporate rescue practitioner by the board in a bid to pluck it out of the financial mess it currently finds itself in, barely a week before the commencement of the cotton marketing season.
The company finds itself in financial distress, failing to pay farmers their dues from the previous season and struggling to retool and pay its workers’ salaries.
COTTCO was given US$60 million under the Presidential input scheme for the crops.
Appearing before the Parliamentary Portfolio Committee on Lands, Agriculture, Fisheries, Water and Rural Development, Mangudya said COTTCO owes MIF US$11 million, with the bulk having been used to settle debts to financial institutions.
“As of today, Mutapa Investment Fund is owed US$11 million by COTTCO as a fact. These facilities (bank loans) had matured and we had to take them off and balance them as Mutapa Investment Fund. The other balance is what we directly gave to COTTCO.
“The money that we gave to COTTCO was not therefore used for the purposes that we had discussed; otherwise, there were other more pressing matters. For example, if a bank is about to take their assets as security, you ask yourself as a shareholder where you put funding.
“The funds that were due and payable to these banks we had to foot ourselves, and that was US$6 million, which is also the amount which is owed to the farmers and transporters,” said Mangudya.
Mangudya added that there is a mismatch in the investment by the government and the output, stopping short of labelling the company a loss-making entity necessitating the corporate rescue.
“Government gives the Presidential input scheme to the farmers through COTTCO so that they produce cotton. You then find that the value, the output being created from that input, the input cost is higher than the value being generated,” he said.
In response, COTTCO board chairman Sifelane Jabangwe blamed legacy debts for the company being placed under corporate rescue, having failed to recover from the period of collapse of the cotton sector.
“Around 2015 the cotton industry collapsed. There were rampant side markets. From that time, the balance sheet has always been weak. COTTCO has operated mostly through the support of government on inputs and also when it comes to raising funding for the annual crop,” said Jabangwe.
Farmers are bearing the brunt of the mismanagement at COTTCO, enduring unpaid credits by the company.
Committee member and ZANU PF legislator Isaac Chinodakufa questioned the competency of COTTCO’s management.
“The buying season is approaching, inputs are absent, and there are plans for the purchasing of plastics. But there is spillage on the ground, which means there is also a lot of money left on the ground. My question now is whether you are working for progress or regressing,” said Chinodakufa.
The post US$70 million down the drain as Mangudya gives brutal assesment of COTTCO’s mismanagement appeared first on NewZimbabwe.com.
