PRESIDENT Emmerson Mnangagwa has amended the fourth schedule of the Sovereign Wealth Fund of Zimbabwe Act by including Fidelity Gold Refinery (Private) Limited and Zesa Holdings among other parastatals to the controversial Mutapa Investment Fund (MIF), which critics say is a vehicle to loot state assets.
OWEN GAGARE
The amendment comes at a time the President is being sued by Harare lawyer and businessman Frederick Nyamande over the promulgation of the MIF which he argues allows the head of state to loot public resources.
The amendment was made through Statutory Instrument 51 of 2024. Mnangagwa said he made the amendment after consulting the Mutapa Investment Fund board.
“This notice may be cited as the Sovereign Wealth Fund of Zimbabwe (Amendment of Fourth Schedule) notice, 2024. The Fourth Schedule (“Assets Forming Part of Initial Capital of Mutapa Investment Fund”) to the Sovereign Wealth Fund of Zimbabwe Act [Chapter22:20] No. 7 of 2014) is amended by the addition of the following items: “Aurez Private Limited, Export Credit Guarantee Corporation of Zimbabwe (Private) Limited, Fidelity Gold Refinery (Private) Limited, Homelink Private Limited, Homelink Finance (Private Limited, Zesa Holdings Private Limited, Zesa Enterprises (Private) Limited.”
Mutapa Investment Fund is a pool of resources, that is public equities, commodity royalties and allocations from the government that will be invested in future. The history of the fund dates back to 2014 and has clear objectives such as to invest for future generations and support the country’s development goals, among other objectives.
On 19 September 2023, Mnangagwa controversially promulgated Statutory Instrument 156 of 2023 (SI 156/2023) which changed the name of the Sovereign Wealth Fund of Zimbabwe to MIF.
No official reasons have been given for the renaming of the fund. Critics complained that the renaming was never explained yet it gives Mnangagwa unfettered powers to appoint the chief executive officer and all eight members of the Mutapa Investment Fund board. He is not bound by any recommendations from anyone.
State enterprises or parastatals commandeered to be under the dodgy MIF include De[1]fold Mine, Zupco, Kuvimba, Silo Investments (Grain Marketing Board commercial arm), the National Oil Company of Zimbabwe, the Cold Storage Commission, Petrotrade, POSB, NetOne Cellular, the National Railways of Zimbabwe Holdings and NRZ Ltd, TelOne, Arda Seeds, Zimbabwe Power Company, Powertel, Allied Timbers, Telecel Zimbabwe, Air Zimbabwe, Industrial Development Corpora[1]tion, Cottco, AFC Limited and Hwange Colliery Company Ltd.
Critics said the effect of putting all the companies under one roof is to create a behemoth whose operations and transactions are not subject to public procurement laws, parliamentary oversight or disclosure to the public.
This, they said, undermines constitutional principles of good governance, transparency and accountability. The fund’s managers and employees are “sworn to secrecy”, further making it opaque and vulnerable to corruption, while blocking access to information.
The fund will be able to transfer and externalise foreign currency without foreign exchange controls. The International Monetary Fund Article IV mission led by Wojciech Maliszewski — which visited Harare from 31 January 14 February — to discuss the authorities’ request for a Staff-Monitored Programme and commence 2024 Article IV consultations, urged the government to introduce reforms and be transparent on the dodgy MIF affairs.
“Structural reforms aimed at improving the business climate, strengthening economic governance and reducing corruption vulnerabilities are key for promoting sustained and inclusive growth and would bode well for supporting Zimbabwe’s development objectives embodied in the country’s National Development Strategy 1 (2021-2025),” the IMF said.
“In this context, the mission encourages the authorities to ensure that the corporate governance arrangement, transparency and financial reporting, and accountability oversight of the recently established Mutapa Fund are in line with international standards and good practices.”
Late last year, former Finance minister Tendai Biti said the MIF is unconstitutional, illegal and opaque, as well as murky and muddy to ensure that it is not transparent and accountable to facilitate looting on an industrial scale.
“The Mutapa Investment Fund is conceptually flawed; it is like an asset management behemoth created to house state enterprises and related assets illegally, make them fungible and easily transferrable. It’s not a typical sovereign wealth fund as we know it. It’s not like Nor[1]way’s US$1.4 trillion Sovereign Wealth Fund, the biggest in the world, for sure,” Biti told The NewsHawks in an interview.
“A normal sovereign wealth fund is a state-owned investment fund comprising of money generated by government surplus reserves or its resources to create wealth for current and future generations. It’s a pool of assets owned and managed directly or indirectly by governments and invested in stocks, bonds, real estate, precious metals, or in alternative investments such as equity funds or hedge funds to achieve national objectives.
“For instance, before this Mutapa scam, we had created a proper sovereign wealth fund in 2014 because Zimbabwe has world-class deposits of gold, platinum, diamonds, chrome and now lithium. Yet these are non-renewable natural resources so we need to exploit them for current and future generations. Collect royalties and invest them in a sovereign wealth fund.”
Biti says the changing of the SWF to MIF has created a conduit for industrial-scale looting.
“Mnangagwa’s opaque structure is a scheme for a grand heist. We will witness unprecedented grand scale looting and industrial-scale corruption under this Mutapa Fund. The structure is flawed conceptually. It is also unconstitutional. It is illegal. It was established through a statutory instrument, a presidential decree, violating the constitution, laws and principles of separation of powers,” he said.
Lawyer and former legislator Fadzayi Mahere said the entity is unconstitutional.
“The most concerning feature of the recent purported amendment to the Sovereign Wealth Fund of Zimbabwe Act by Mnangagwa is that it is unconstitutional in a number of respects,” she said.
“As a starting point, the amendment was introduced by way of a statutory instrument, which violates section 134 of the constitution. The said section prohibits the enactment, amendment or repeal of legislation by way of a statutory instrument. Only Parliament can make, change or remove laws.”
