HARARE – Cotton Company of Zimbabwe (Cottco) has initiated proceedings to enter corporate rescue, a legal process aimed at rehabilitating financially distressed firms, as it seeks to stabilise operations ahead of the 2026 cotton marketing season.
The move will, according to State Media, see the appointment of an independent corporate rescue practitioner to take over management from the board and oversee restructuring efforts designed to restore the company’s solvency.
Cottco board chair Sifelani Jabangwe said the decision is intended to strengthen the organisation’s financial position, recapitalise the business and realign its operating model.
“Since 2016, when Cottco’s resuscitation was supported by the Government, the company has maintained a weak balance sheet and has relied on guarantees to secure funding for annual cotton crop cycles,” Jabangwe said.
The company’s financial strain has been compounded by legacy debts, including those arising from the El Niño drought of 2024, which severely affected production. National cotton output fell to approximately 12,000 tonnes, with Cottco recording intake of about 9,900 tonnes—well below its break-even threshold.
The shortfall contributed to further debt accumulation, prompting the need for a capital raising programme to clear arrears and restore financial stability.
However, efforts to raise capital were delayed by a backlog in audited financial statements dating back to 2015–2019, a period during which the company operated without a board. Jabangwe confirmed that accounts have now been updated up to 2023, with 2024 and 2025 financials expected to be completed by September 2026.
Despite progress, mounting pressure from creditors has accelerated the decision to enter corporate rescue, with some reportedly seeking to attach company assets.
“To protect Cottco’s assets and allow for the completion of the capital raising exercise, the board resolved to place the entity under corporate rescue. Asset attachment would have undermined both the company’s recovery prospects and broader national interests,” Jabangwe said.
Corporate rescue provides a temporary legal framework that shields companies from creditor action while restructuring plans are implemented. The process is expected to give Cottco breathing space to reorganise its finances and operations.
Cottco remains a key player in Zimbabwe’s agricultural sector, particularly in supporting smallholder cotton farmers, and its recovery is seen as critical to the country’s broader economic development agenda under Vision 2030.
