Innovation or Looting Scheme: A Look at Zimbabwe’s New Mutapa Investment Fund

By Prince Kurupati*

Individuals who work either as employees or in their personal capacity as entrepreneurs may at times find themselves with extra funds after paying for essentials. These extra funds are referred to as disposable income as it’s the money that can be used for luxuries or savings/investments. Governments on the other hand after they engage in trade may end up with surplus (income) reserves. Often, these surplus reserves are channelled towards the Sovereign Wealth Fund (SWF), a state-owned investment fund that can be used for a variety of purposes.

As most countries globally engage in trade and other income-generating activities, many of them do have a Sovereign Wealth Fund. The investment fund is put in place to ensure that whenever surplus (income) reserves are realised, they are channelled to the fund. The funds can then be used for various purposes which include savings (future generation funds), stabilisation funds, reserve investment funds, public benefit pension reserve funds or for helping emerging or distressed industries during times of need.

Since 2014, Zimbabwe had one such Sovereign Wealth Fund. Zimbabwe’s SWF was designed to build up a portfolio of State-owned investments for the benefit of future generations. The state-owned investments include both those wholly owned by the state and joint ventures that the government has shares in.

Just this past month however, Zimbabweans woke up to surprising news that the Sovereign Wealth Fund had been disbanded and, in its place, emerged the Mutapa Investment Fund. The country’s President Emmerson Mnangagwa fresh from his electoral victory of August 23 had just invoked his Presidential Powers to amend and rebrand the SWF to the Mutapa Investment Fund using Statutory Instrument 156 of 2023.

Just like the now disbanded SWF, the new Mutapa Investment Fund as contained in Statutory Instrument 156 of 2023 will be funded from the balance of payment surpluses, official foreign currency operations, the proceeds of privatisation, government transfer payments, fiscal surpluses and resource earnings.

Controversially, however, Statutory Instrument 156 of 2023 exempted the Mutapa Investment Fund from following Procurement regulations. The rationale behind speeding up the procurement process as the red tape bureaucratic procurement process that was previously in place hindered the fund’s competitiveness.

The rebranding essentially meant that the shares in 20 State-owned enterprises which were part of the disbanded SWF were transferred to the Mutapa Fund. Among the 20 entities were some major mining companies such as Kuvimba Mining House, major power stations, as well as leading state bodies such as the National Railways of Zimbabwe, Air Zimbabwe, TelOne, NetOne, Zupco and Cottco.

The news about the rebranding of the SWF was greeted with mixed reactions by the country. Well, more appropriately, it's best to say it was received along political party lines. Those aligned to the government of the day and supporters of the ruling Zanu (PF) party were quick to embrace the decision saying it was a step in the right direction towards the revitalisation of the country’s economy. Government critics and the opposition however were sceptical and others in total disagreement with the move saying the rebranding was largely driven by greed and a selfish agenda aimed at looting the country’s resources.

Writing in the State publication The Herald, which is sympathetic to President Mnangagwa, Farirai Machivenyika said the Mutapa Fund “will be a game changer in the country’s quest to allow Zimbabweans to benefit from their natural resources”. The chief executive officer of Vision 2030, an empowerment organisation established to rally the country’s citizens in support of the government’s initiative to achieve an upper-middle-income country by 2030 Mr Walter Chimene had this to say:

“The Mutapa Investment Fund will be a game-changing paradigm to allow Zimbabweans to think and exploit for their benefit, their God-given natural and human capital resources… The Fund implementation model will ensure that empowerment initiatives are activated so that resources can be unlocked, and opportunities created while indigenous innovations will be turned into solutions.”

Dr Munyaradzi Kereke of the Justice Foundation said that the newly established Mutapa Investment Fund “by its nature, the fund has a long-term perspective, such that its investments would lead to sustained socio-economic growth and development, which will contribute to intergenerational justice in the enjoyment of the fruits from Zimbabwe’s natural resources and State-owned enterprises.”

Echoing the same sentiments is Tawanda Chabara, a lecturer in Finance and Investment who said, “The Mutapa Investment Fund represents a significant milestone for Zimbabwe, not just as a financial instrument but as a harbinger of economic potential. By understanding its foundation, based on the Sovereign Wealth Fund Act and the recent Statutory Instrument 156 of 2023, we gain insights into Zimbabwe’s economic ambitions. Moreover, the fund serves as a unique ‘savings account’ for the nation, which could play a critical role in stabilising its economy and fostering development”.

Former Finance Minister in the Government of National Unity (GNU) running from 2009 to 2013 and a key member of the main opposition party the Citizens Coalition for Change (CCC) Tendai Biti described the new Mutapa Investment Fund as nothing but an unconstitutional capture of the country’s funds. In an interview with independent TV station Heart & Soul, Tendai Biti said, “The instrument (Statutory Instrument 156 of 2023) does not meet the test of the law and must be rejected as it is illegal. This law was unnecessary… They are transferring the public shares into a private vehicle. The government already owns the shares, I think the issue is to sell shares as quickly as possible without public scrutiny.”

Biti said President Mnangagwa and his administration have for long aimed at evading public accountability and transparency in national procurement projects hence the reason behind the establishment of the Mutapa Fund. He however went on to state that President Mnangagwa and his administration will still have to be accountable as section 340 of the Constitution states that “neither the President nor Ministry of Finance secretary George Guvamatanga could seek not to exclude the operations of Public Procurement Act from any transaction.”

By exempting the Mutapa Fund from the Procurement Act, Siphosami Malunga a human rights lawyer shared the same sentiments expressed by Tendai Biti saying, “The unconstitutional Mutapa Investment Fund in Zimbabwe, is not a Sovereign Wealth Fund but an untransparent, unaccountable, personalised funnel for appropriation and privatisation of Zimbabwe’s entire public wealth and resources and the greatest national heist since Cecil John Rhodes.”

**Culled from November Issue of PAV Magazine