UNDERSTANDING THE MUTAPA FUND.
Yesterday (1st of October 2023), we had a very interesting discussion about the MIF #MutapaInvestmentFund. 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.
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.
As a result, there is a lot of skepticism around the fund, with many perceiving the secrecy and lack of transparency around the fund as deliberate mischief to make it difficult for people to understand and for elites to potentially loot.
The prevailing questions in our debate were: Who will own the fund? Who will control the fund? How will the fund be administered? Where will the funds to run the fund come from if the current Sovereign Fund only has $96 million? How will the shareholder fund the companies and what will happen to the debts of the companies?
Now, in my understanding, the MIF is a body corporate into which the Zimbabwean government has transferred its shareholding in strategic parastatals and companies, along with their earnings, royalties from the mineral wealth of the country and the Sovereign Wealth Fund of the nation. These assets will be managed by professional fund managers on behalf of the people, to grow the wealth.
The parastatals and companies, on the other hand, will still be directed and managed by current structures, albeit with strategic influence now coming from the new shareholder, likely to lead to some restructuring.
In our discussion, many felt that any vehicle controlling shares of public companies and interests should be owned by the government. However, they failed to appreciate that the government of Zimbabwe is essentially a public institutional vehicle that can be used to control the commonwealth of Zimbabweans through bureaucratic processes regulated by statute.
Conversely, the commonwealth can also be transferred into a private company, to be managed professionally and more efficiently by fund managers, regulated by corporate governance and investment laws, on behalf of the people. Meanwhile, the former government-owned companies and parastatals will still be regulated by the same statutes created to govern them initially. Amendments will be necessary regarding who they report to and protocols, in line with the change in shareholding from the government to a private fund.
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 rationalize, restructure, produce, raise funds, be viable and repay their own debts through generated revenue.
Through management by exception, the shareholder (the fund and its managers) can now influence the strategic and operational direction of companies and parastatals in the portfolio. They can set strategy, performance targets, demand innovation and request accountability for capital injection, loan surety, earnings, or authority to spend on bonuses, salary increases or perks.
This is my understanding of how the MIF was set up as a shareholder managing our companies, royalties, earnings, assets and sovereign wealth fund. Consequently, these assets are no longer controlled by the government but by our Sovereign Fund trust of the Zimbabwean people.
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, as explained by Dr. Guvamatanga.
It, therefore, follows that the President’s oversight does not necessarily make the institution a government-controlled or owned entity, but rather a people-owned institution.
By doing so, the government no longer needs to fund the select companies, and furthermore, the private fund should be immune from the contagion of illegal western sanctions on the government. This leaves the companies free to raise funds, retool, acquire machines, software and technology; receive export payments, loans, and open foreign bank accounts previously denied to Zimbabwean parastatals that were sanctioned because they were owned by the Zimbabwean government.
This unlocks these companies’ ability to produce for optimum performance. Nonetheless, strong safeguards are needed to protect this national treasure.
The purpose of my writing this piece is to ventilate the misunderstandings (by others and myself) surrounding the fund, address the questions raised by people and highlight the need for the government to educate the public on the Mutapa Investment Fund and its legal workings.
I also read an article by Fadzai Mahere that claims that the Fund was constituted unconstitutionally and that there is no parliamentary oversight over the fund, as stipulated in the statutory instrument that established the fund.
I salute the spirit of her article, and I commend such inquiry and proactive civil activism by the parliamentarian because it is fundamental for Zimbabweans to ensure that the right checks and balances are in place to manage the nation’s commonwealth for our children.
However, these are the concerns that make it imperative for her and others like her to attend all parliamentary sittings where the President is present, so that they can raise such issues. Where necessary, it is prudent for citizens guided by legal minds, to approach the courts to challenge the lack of public consultation, public participation and the lack of adequate oversight over the fund in the statutory instrument.
This is how things are done in a democracy and how we will ensure that the fund is constituted in the best form that works for Zimbabweans and our future generations.
By Rutendo Matinyarare, Chairman of ZASM and Founder of Frontline Strat Marketing Consultancy.