Quton is owned by Zimbabwean-listed seed company Seedco, which has a presence in several other sub-Saharan countries. The two companies have however not yet disclosed the acquisition amount for the deal.
Earlier this month, SeedCo – which has invested about US$25m in its other Africa operations in the last three years – commissioned a new seed-producing plant with capacity of 60 000 tonnes per year in Malawi. In the half-year period to the end of September, Seed Co’s revenues fell 7% to $16m, but it expects revenues to climb up in the second half of the year.
Most Zimbabwean companies are struggling for funds to invest in production capacity enhancement, with investors sceptical of the country’s investment climate and uncertain political framework.
Morgan Nzwere, the group chief executive for SeedCo, said the partnership in Quton with India’s Mahyco "will help us take the business (progress) forward in terms of new technologies, particularly the introduction of hybrid cotton seed into Africa".
The Zimbabwean government is said to have been supportive of the acquisition by the Indian firm. Zimbabwe has adopted a Look East policy - helping it drum up some investments from China, Russia and India - after relations with the West soured.
Indigenisation issues
However, it was not immediately clear whether the investment by the Indian agri-technology firm will be subject to Zimbabwe’s indigenisation laws. The controversial empowerment legislation, which was first promulgated in 2007, requires that foreign companies own less than 50% in local companies.
The government is however trying to bring flexibility to the policy, with Finance Minister Patrick Chinamasa saying at an investment conference in South Africa last week that the legislation is flexible and sector-specific. Zimbabwe is desperate for fresh capital, which is needed to prop up productivity and stabilise the economy.
The agriculture sector in the struggling country is only starting to rebound. Agriculture Minister Joseph Made is hoping that Mahyco will work with cotton farmers in the country and focus on providing superior quality of seeds to improve the farmers’ productivity and livelihoods.
Mahyco managing director Raju Barwale said on Monday that the acquisition of the Zimbabwean seed company "enables" his company to "place ourselves strongly" in the African sphere.
"Africa has a significant potential for agriculture productivity enhancement and access to modern seed technology will facilitate the same along with benefits to the local farming communities," he said.