Active Mixed AidData Chinese Aid

CDB pledges loan for production and purchase of seed cotton

$500K USD

Funder	China Development Bank (CDB)
Recipient Organization	Unspecified Joint Venture between Sinotex and Cotton Company of Zimbabwe
Country	Zimbabwe
Start Date	Mar 01, 2011
End Date	Dec 01, 2028
Duration	6,485 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`21978`

Grant Description

CDB pledges loan for production and purchase of seed cotton In March 2011, Sinotex Investment & Development Co. (中纺联 or Sinotex), the Cotton Company of Zimbabwe (与津巴布韦棉花公司 or 中非棉业津巴布韦有限公司 or 公司正与津巴布韦棉花公司 or Cottco) and China Development Bank (CDB) signed an MOU, which outlined the terms of a $500 million financing arrangement for the production and purchase of seed cotton.

Under the terms of the MOU, Sinotex Investment & Development Co. and the Cotton Company of Zimbabwe were expected to establish a joint venture, and CDB would then issue one or more loans to the joint venture.

With CDB financing, Sinotex and the Cotton Company of Zimbabwe hoped to increase an out-grower scheme by 100,000 new farmers, and expand technical and input support to the growers; however, it does not appear that this CDB loan ever materialized, and Sinotex shut down its operations in Zimbabwe in 2016.

📋 Staff Comments

At the time that the MOU was signed, Cotton Company of Zimbabwe was the largest cotton buyer in the country and had an out-grower scheme supporting more than 200,000 farmers.
According to media reports, in 2011, CDB also provided a $10 million loan as a pre-shipment finance for the sale of lint by Cottco to Sinotex. This potential loan commitment requires further investigation.

📚 Sources & References

U.S.$500 Million Cotton Deal Unveiled, http://www.herald.co.zw/index.php?option=com_content&view=article&id=68291:china-to-increase-investment-in-zim&catid=37:top-stories&Itemid=130#.UVNyZhy84fU
China investing heavily in Africa
China tipping the trade balance in Zim
Chinese firm to provide US$500 million for cotton cultivation in Zimbabwe
Sinotex of China
Zimbabwe Cotton Co. in Seeds Deal
Herald Says
国家开发银行非洲中小企业发展专项贷款
US 500m Cotton Deal Unveiled
Contract farming and informality: drivers and governance responses in Zambia and Zimbabwe
Coton : accord entre la Chine et le Zimbabwe
US$500m Chinese cotton deal for Zimbabwe
China-Africa Cotton Zimbabwe (PVT) Limited
中非棉业津巴布韦有限公司
国开行搭建经合平台支持“走出去”战略
EVALUATING THE EFFECTIVENESS OF CONTRACT FARMING PRACTICE ON PRODUCTION OUTPUT IN COTTON INDUSTRY
CASE OF COTTCO (THE COTTON COMPANY OF ZIMBABWE). Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.