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New investment fund exposes polarisation



WHEN President Emmerson Mnangagwa changed the name of Zimbabwe’s first-ever sovereign fund to Mutapa Investment Fund (MIF), the country’s deep-rooted polarised opinions were laid bare.


Before the name change, the fund was up until late September this year referred to as the Sovereign Wealth Fund of Zimbabwe, a neutral name given the country’s ethnic diversity and complexities as well.

For some, renaming the sovereign wealth fund after one of the most dominant pre-colonial empires signaled Harare’s aspirations for the fund’s grandeur.

Some critics, on the other hand, raised eyebrows, saying President Mnangagwa could be secretly plotting to establish an entity that would in future benefit his family and cronies after retirement.

Not just that, naming an investment fund after an ethnic group which Mnangagwa identifies with also stirred debate on the country’s growing tribal politics which analysts say has been widely projected ever since Mnangagwa took power in 2017 following a military-assisted intervention.

After all, for them Mnangagwa had been referred to as Munhumutapa/Mwenemutapa (in other dialects) by his deputy Constantino Chiwenga, who, according to critics, meant he had been elevated to a monarch.

During a yesteryear rebuke of a Masvingo traditional chief who had raised concern over high levels of corruption and impunity in the country, Vice-President Chiwenga addressed his boss as Munhumutapa: equating him to one of the most dominant empires in the country’s pre-colonial history.

Nearly 10 years ago, the government launched the country’s first-ever sovereign wealth fund, an initiative meant to benefit future generations even when finite natural resources eventually get depleted.

At its launch, the fund was expected to be financed through proceeds of the government’s shareholding in mining assets. Zimbabwe is endowed with over 40 base minerals and several precious stones.

Now proceeds from other non-resource entities will fund the MIF.
A sovereign wealth fund is a pool of money set aside by a government to benefit an economy and citizens.

The money from a sovereign wealth fund comes from the country’s reserves that have grown due to budget surpluses, trade surpluses and revenue gained from exporting natural resources.

“We have one Munhumutapa (Mnangagwa), we have one leader and it is that leader we give respect. It is that leader we show the entire nation what respect is all about,” Chiwenga said a few years back.

“This is Zimbabwe. I thought I should say this, I respect Munhumutapa and no one touches him as long as I live.”

To add to the drama, Mnangagwa used his presidential powers not only to push for the name change but also exempted the MIF from going through public procurement in what his critics say was a subtle of way of evading scrutiny.

Outside matters relating to ethnicity, the form and structure of the investment fund also triggered pertinent questions which beg answers.

Former opposition Citizens’ Coalition for Change spokesperson and member of Parliament for Mt Pleasant, Fadzai Mahere, said the new fund was a grand looting scheme.

“Historical accounts of the decline and collapse of Mutapa State offer a cautionary tale for Zimbabwe’s sovereign wealth fund, ironically ‘renamed’ the Mutapa Investment Fund by Mr Mnangagwa in an unconstitutional Statutory Instrument on the 19th of September 2023,” Mahere wrote on her blog this week.

“No official reasons have been given for the renaming of the Fund. However, the effect of the name change is to make it not readily discernible to a foreign entity that they are dealing with a sovereign wealth fund as opposed to a private investment fund.”

Granting Mnangagwa carte blanche powers in appointing the sovereign wealth fund’s board of directors, Mahere argued would also heighten cronyism and nepotism after Zimbabwe’s leader recently appointed close family members, allies and clansmen into his executive.

“Although he has to consult the minister (of Finance and Investment Promotion), he is not bound by any of the minister’s recommendations,” she added.

“This provision is concerning in light of recent appointments by Mr Mnangagwa to Cabinet and other public posts which have been criticised for breaching sounding corporate governance principles and being underpinned by instances of nepotism. The lack of independence of the fund and limited (if non-existent) checks and balances on an already powerful executive head increase the potential for looting and abuse of state resources.”

South Africa-based Zanu PF sympathiser and anti-sanctions campaigner Rutendo Matinyarare defended the proposed composition of MIF, chiding critics for their limited knowledge.

“In that debate, it became clear that there is little understanding of what the investment fund is, how it works, how it will be managed and the safeguards around it,” he wrote on his blog.

“It also appeared that most people (some very educated and qualified in finance) could not differentiate between shareholding, directorship, and management of a company. All of this is because the Zimbabwean government has not created awareness and educated Zimbabweans about the MIF, how it will function and how it will be regulated.”

He also argued that the transfer of government companies to the control of a private fund manager, allows the ring-fencing of the proceeds of these assets from government use, so that the proceeds can be protected for the future, as was done in Norway.

“It also relieves the government from the burden of guaranteeing and amortizing the debt and borrowing of the companies against taxpayers’ funds, as it becomes the responsibility of the fund (shareholder) to push companies to rationalise, restructure, produce, raise funds, be viable and repay their own debts through generated revenue,” Matinyarare said.

“The President of Zimbabwe, elected to represent the Zimbabwean people, remains the overseer of the investment fund, alongside the Minister of Finance and the people of Zimbabwe (Parliament, civil society), who will receive audited financials and annual reports.”

Tinashe Murapata, chief executive at investment and advisory firm Leon Africa, says the transfer of perennially loss-making state-owned enterprises to MIF books is a ploy nationalise state assets.

“What is happening is nationalisation of commercial assets with direct control and command by the centre,” Murapata says.

“Many of these assets were private, had private shareholders, parastatals, ran at arms length and now all directly bundled under the command of Mutapa. 

“This is nothing new. This happened in Africa in the 1960s where companies were bundled up through nationalisation and a joint venture with a preferred private investor was pursued. It reminded me very much of Tiny Rowland — the preferred private investor and his foray in Africa.” 

While attending the Dubai Expo two years ago, Finance minister Mthuli Ncube told The NewsHawks over the phone that the country’s sovereign wealth fund would be “strengthened”.

“It’s a very important institution for preserving wealth for future generations of Zimbabwe and as government we are really strengthening this institution. It was created a few years ago, but has not been as active,” Ncube said.

“The Sovereign Wealth Fund is being strengthened. We are appointing a new board as a first thing to lead the institution. Secondly, we are going to add more assets under the institution in the form of gold assets, coal assets and then oil and gas assets, among other assets, so that it becomes a safe of future generations in terms of wealth preservation which will deal with inter-generational issues in the country.”

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