OWEN GAGARE
ZIMBABWE’S sovereign wealth fund, Mutapa Investment Fund, has got a massive US$2 billion capitalisation loan from the government through Treasury bonds.
The huge capital advance for outlay is covered by a loan agreement between Treasury and Mutapa, whose chief executive is former Reserve Bank of Zimbabwe governor John Mangudya.
The loan will be repaid by Mutapa —based at No. 49 Kew Drive, Highlands, Harare (the late former prime minister Morgan Tsvangirai’s house) — to Treasury in line with the loan agreement.
This revelation is contained in a Finance ministry 2023 annual report to Parliament on public debt.
The report says: “Government, in 2023, issued Treasury bonds amounting to US$924 million to expunge legacy debts at the Reserve Bank of Zimbabwe and US$1.92 billion as a capitalisation
loan to the Mutapa Investment Fund, which is covered by a Loan Agreement between Treasury and the Mutapa Investment Fund.
“In this regard, the capitalisation loan will be repaid by the Mutapa Investment Fund to Treasury, in line with the Loan Agreement.”
Treasury bonds were the government securities of choice used in the capital mobilisation for Mutapa, a pool of resources, that is public equities, commodity royalties and allocations from
the government that will be invested for future generations.
Unlike Treasury Bills which have short-term maturities and pay interest at maturity and Treasury notes that have mid-range maturity and yield interest every six months, Treasury bonds have long maturities and generate interest every six months.
Mutapa, which was established in September last year to replace the 2014 Sovereign Wealth Fund, has a big portfolio with 66 state-owned enterprises, subsidiaries, and state-invested enterprises which include companies in loss-making or break-even positions.
The 66 companies, which previously were the locomotive of the economy, entail intermediary holding companies, operational and dormant entities, listed and state-owned enterprises.
There are 30 state-owned enterprises under Mutapa since February, which the fund wants to leverage to attract international investment to channel into the country’s critical capital projects.
Mutapa’s portfolio includes state owned enterprises across a vast swathe of the economy in various companies such as Zesa Holdings, Defold Mine, Zupco, Kuvimba Mining House, Silo
investments, National Oil Company of Zimbabwe, Cold Storage Commission Limited, Petrotrade, People’s Own Savings Bank, NetOne, National Railways of Zimbabwe, TelOne, Arda Seeds, Zimbabwe Power Company, PowerTel Communications, Allied Timbers, Telecel, Air Zimbabwe, Industrial Development Corporation, Cottco and Hwange Colliery Company Limited, among many others.
Mutapa has developed an investment strategy clustered around five main sectors: natural resources, energy and trading, infrastructure, industrials and financial services and real estate.
Despite its ballooning debt stock, the government continues to issue debt securities to raise funds.
According to the latest government statistics, Zimbabwe’s debt has reached US$18billion, from US$17.7 billion indicated in the 2023 public debt report released in September 2023.
At the time, the public debt management office said the total public and publicly guaranteed (PPG) debt was marginally up by 0.6%, in annual terms, to US$17.7 billion as of the end of September 2023 from US$17.6 billion as of the end of September 2022.
Of the September 2023 total PPG debt stock, 72% (US$12.7 billion) was contracted externally, while 28% (US$5 billion) was contracted from the domestic market.
The external PPG debt comprises bilateral debt (US$6 billion), multilateral debt (US$3.1 billion), and Reserve Bank of Zimbabwe (RBZ) debt (US$3.6 billion).
In the same vein, the total domestic PPG debt consists of compensation to former farm owners (69.7%), government securities (29.2%), and arrears to service providers (1.1%).
As at September 2023, total debt stock was 1.8% lower than the US$18.02 billion recorded in December 2022.
This decline was mainly attributable to a decrease in external debt due to Treasury’s takeover of US$684.8 million liabilities on the RBZ balance sheet.
The latest debt report says the country’s debt stock as at end of June 2024 amounted to ZiG287.2 billion (US$20.9 billion), comprising of external debt of ZiG168.5 billion (US$12.2billion) and domestic debt of ZiG118.7 billion (US$8.6 billion).
The debt stock is broken down as 58.7% external debt and the remainder (41.3%) being domestic debt.
