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All state owned technology companies in Zimbabwe have been moved to MIF, away from parliament scrutiny and authorisation, they join 20 other state companies which will now be under direct control of the “private controller”
The coincidence to have a Munhumutapa and a Mutapa Investiment may seem natural and harmless, but for careful plotters with long term vision, this may read like a movie script for conscpiracy, yet it may be a little too late for proper oversight over public assets.
The Zimbabwe government at the instigation of the president made a Statutory instrument Statutory Instrument 156 of 2023 which effectively ceded power from the government to the investment fund
Mutapa Investment Fund, formerly known as the Sovereign Wealth Fund of Zimbabwe is a Zimbabwean sovereign wealth fund formulated by the Sovereign Wealth Fund Act (Chapter 22:20).
Many of the enterprises being taken under Mutapa were already bleeding the taxpayer. With no seed capital, no institutional reform or better oversight, there is no reason to believe that the same parastatals will start working only with the transfer to Mutapa.
There is real fear that those that have been performing well may be captured by the new private shareholder and prone to financial abuse and looting which may ultimately run them dowm
Among the changes, some 20 enterprises will now be owned by the SWF, now renamed the Mutapa Fund. They range from mining to telecoms, energy and agriculture, which will make Mutapa influential in the economy.
Mutapa Investment Fund has US$16 billion worth of assets under management, according to John Mangudya, CEO of Zimbabwe’s sovereign wealth fund. The companies under it include.
- NetOne Cellular (Private) Limited
- National Railways of Zimbabwe
- Air Zimbabwe
- TelOne
- Cottco
- Zupco
- Defold Mine
- Kuvimba Mining House
- Silo investments
- National Oil Company of Zimbabwe
- Cold Storage Commission Limited
- Petrotrade
- People’s Own Savings Bank
- ZESA
- Fidelity Gold Refinery
- Homelink
- Arda Seeds
- Zimbabwe Power Company
- PowerTel Communications
- Allied Timbers
- Telecel
- Industrial Development Corporation
- Hwange Colliery Company
The latest change suggest that Ministers will no longer appoint boards and managers to the affected parastatals, a right that gave them great influence in the past. According to the SI, the transfer of these assets was done within 21 days.
The government is to appoint fund managers to advise on Mutapa’s investments.
Mutapa’s empire: Zimre’s Sawanga Mall in Vic Falls. Mutapa is now a key Zimre shareholder
In 2020, presenting the 2021 budget, Ncube complained that his failed effort to privatise state enterprises had been resisted by “vested interests” in government. The solution, he proposed then, was to remove the companies from the control of ministries and have them housed under a single entity.
He argued that having parastatals scattered across different ministries was an old model that other countries are moving away from.
“This ownership model has been associated with a number of challenges, including inconsistencies in governance practices, Ministerial interferences, delays and/or reversals of Government-approved SEPs reforms due to vested interests within some line Ministries,” Ncube said.
Mangudya told the Sunday Mail that Mutapa in June completed a “comprehensive diagnostic assessment” of its portfolio. “The fund appointed reputable accounting firms to conduct the valuation of assets under the management of the fund,” Mangudya said. The firms have not been named.
In June, Mutapa received a 2023 dividend of an equivalent of US$2.2m NOIC. POSB delivered a dividend of US$590,000 for the first quarter of 2024.
Mutapa’s largest asset is Kuvimba Mining House, whose valuation has been questioned after a share sale last year that added to domestic debt.
The government loaned the Mutapa Investment Fund US$1.6 billion to buy a 35% stake in Kuvimba. That transaction implies a US$4.5 billion valuation for the mining company. The 35% stake was reportedly held by a “management consortium”, but no disclosures have been made. Kuvimba was formed from government mining assets and mining operations previously held by businessman Kuda Tagwirei.
Ethiopian Investment Holdings is Africa’s largest sovereign wealth fund, with assets under management of US$150 billion, according to the International Forum of Sovereign Wealth Funds, which monitors such funds globally. The Ethiopian fund holds over 30 state companies, including flagship enterprises such as Ethiopian Airlines and Ethio Telecom. The company has recently announced plans to list Ethio Telecom, the Ethiopian Insurance Corporation, and the Ethiopian Shipping and Logistics Services Enterprise.
Mutapa’s claimed asset value would place it at par with the wealth funds of oil producing Algeria, and it would be bigger than similar funds in Angola. In the region, Botswana’s Pula Fund and Namibia’s Welwitschia Fund focus mostly on helping government manage monetary policy and offsetting budget deficits.
With the recent changes to the Sovereign Wealth Fund (SWF), the Mutapa Fund, President Emmerson Mnangagwa is building a new empire of parastatals away from the influence of his Ministers.
For Finance Minister Mthuli Ncube, this is what he has been craving for over the past three years.
Having one entity run state enterprises was a “more progressive” ownership model, he claimed, citing examples of such models in the region and elsewhere. Still, he never got his way. In 2018, he had announced an ambitious plan to reform or sell over 30 state enterprises. The bulk of the proposed sales never took off, with companies unable to pay consultants and the process caught in red tape.
Attempts to merge some parastatals had failed “due to diverging views of the parent ministries in as far as the merger is concerned” Ncube said.
Now, changes to the laws governing the Sovereign Wealth Fund will help him get his way.
The companies include Defold, the vehicle into which government has controversially put some of its mining assets, previously held under the Zimbabwe Mining Development Corporation. Mutapa will also hold government’s interests in Kuvimba, which is now one of the largest mining operations in Zimbabwe. When Kuvimba issued its maiden dividend in 2021, the government had 21.5% in the company while the sovereign wealth fund had 6.5%.
As he chaired his first post-election Cabinet meeting on Tuesday, President Emmerson Mnangagwa primed his ministers for the changes the new regulations will bring to how parastatals are managed.
“The recently gazetted Statutory Instrument No. 156/2023 on the Mutapa Investment Fund has far reaching implications to our State Owned Enterprises as well as the state of our economy as a whole. I expect Cabinet to play its part in line with the overall vision of this new development,” Mnangagwa said.
However, questions remain on Mutapa’s governance and funding. The SWF was formed in 2014, then became inactive.
Mutapa is supposed to be funded by a quarter of earnings from mineral royalties. In 2020, Ncube announced he had granted the SWF the equivalent of US$100 million as seed capital to get it going. Since then, however, the government has never disclosed how much money the fund currently holds or what assets it holds in total
Former RBZ deputy governor Kupukile Mlambo was appointed CEO of the fund last December, but he has reportedly since left.
The government’s strategy on Mutapa has been to use it as its representative in investments. The projects government has pushed on Mutapa are broad, from a proposed floating solar power station in Kariba, where Mutapa would hold 10%, to proposed partial rights in Invictus’ Muzarabani gas prospect. Currently, the government is pushing for Mutapa to buy Tongaat Hullet’s sugar estates. Last year, the Fund also proposed to buy the majority 33.8% stake in ZimRe Holdings from Dayriver Corporation, owned by the Rudland family.
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