MUTAPA INVESTMENT FUND - PROTECTING THE NATION’S WEALTH.

Zimbabwe’s sovereign wealth fund Mutapa Investment Fund.

The President of Zimbabwe has just issued a brilliant executive order to place all government shareholdings, assets, profits, capital and investments of select State-Owned Enterprises (SOEs) and companies under the management of a professionally run #MutapaInvestmentFund or the Zimbabwe Sovereign Wealth Fund.

By doing so, the President has effectively shifted control of critical Zimbabwean parastatals and the national sovereign wealth fund, away from political principles and civil servants to a professionally managed investment company led by financial experts, and many bureaucrats are not happy because it reduces their chances to loot.

This means that investment capital, reserves, savings and budgets of SOEs will now be overseen by professional financial managers. Parastatal managers will now need to provide a solid business case to justify expenditure on new vehicles, perks, trips, budgets, and be accountable to the managers of the sovereign wealth fund, based on corporate governance, financial performance, available capital and reconciliations.

The sovereign wealth fund is now a private trust, holding Zimbabwean public company shares, profits, revenues and capital on behalf of the Zimbabwean people. Consequently, any sanctions or restrictions on the government and its companies no longer apply to the former parastatals which are now controlled by the fund.

These companies are technically not the property of the government of Zimbabwe but rather the property of a private fund belonging to the Zimbabwean people.

So now, if the US government wishes to impose sanctions on these companies, they would need to issue new sanctions targeting the sovereign wealth fund of the Zimbabwean people. This approach is indeed ingenious.

However, having celebrated such a brilliant idea for its advantages, we must also ensure that there is adequate oversight over the fund, to ensure that it is not used to Zambianize Zimbabwe by privatizing Zimbabwean national assets and parastatals as the Zambians did. Such privatization eroded the Zambian balance sheet and national sovereignty, leaving that government broke and now it perpetually has to carry a begging bowl to the west and east, because it has no balance sheet to leverage for its development or to amortize its debts.

By Rutendo Matinyarare, Chairman of ZASM.