New Mutapa fund takes over shares in 20 entities

President Mnangagwa

The Government shareholding in a large block of 20 State-owned companies has been transferred to the Mutapa Investment Fund, the upgraded and renamed Sovereign Wealth Fund, including mines, major power stations, the National Railways of Zimbabwe, Air Zimbabwe, NetOne and TelOne, Cottco and Zupco.

This vesting converts the Mutapa Investment Fund into a huge entity with assets worth billions of dollars overseen by the Minister of Finance and Investment Promotion, but with a board of 10 members.

In a Statutory Instrument gazetted on Tuesday, President Mnangagwa invoked his Presidential Powers to temporarily amend the Investment Laws to rename and upgrade the old Sovereign Wealth Fund and transfer the shares in the 20 State-owned enterprises to the Mutapa Fund.

Some of the newer entities, such as Kuvimba Mining House, were set up with the Government shares already held by the old Sovereign Wealth Fund, but many arose a couple of decades ago from the conversion of parastatals into State-owned companies. 

The State-owned shares in these now move to the Mutapa Fund.

The original Sovereign Wealth Fund, created in 2014, was designed to build up a portfolio of State-owned investments for the benefit of future generations. These could be in companies owned entirely by the State, or in joint ventures with outside or private shareholders.

It is a State-owned investment fund established from the balance of payment surpluses, official foreign currency operations, the proceeds of privatisation, Government transfer payments, fiscal surpluses and resource earnings.

The fund was created in 2014 following the enactment of the Sovereign Wealth Fund Act, but was only funded when the Second Republic decided to make budgetary provisions and resurrect what had been just a name without any assets. While President Mnangagwa used his temporary powers to make the changes, Parliament will be asked to make these permanent sometime over the next six months before they fall away.

“There is hereby established a Sovereign Wealth Fund, to be known as the ‘Mutapa Investment Fund.’ The fund is a body corporate capable of suing and being sued in its own name and, subject to this Act, doing everything that bodies corporate can do by law,” reads the new law.

The State-owned shareholdings transferred to the Mutapa Investment Fund are those in: Defold Mine, Zupco, Kuvimba Mining House, Silo investments, National Oil Company of Zimbabwe, Cold Storage Commission Limited, Petrotrade, People’s Own Savings Bank, NetOne, National Railways of Zimbabwe, TelOne, Arda Seeds, Zimbabwe Power Company, PowerTel Communications, Allied Timbers, Telecel, Air Zimbabwe, Industrial Development Corporation, Cottco and Hwange Colliery Company.

The regulations provide for the establishment of a board of the fund which will be constituted by 10 members and the procedure within which it will be appointed.

The board consists of the top two staff, the chief executive and the chief investment officer, plus eight others members, including the chairperson, appointed by the President after consulting the Finance Minister. 

Members need to be people of recognised integrity, have proven competence in finance, investment, economics, business management or law, and represent the diversity of the peoples and communities of Zimbabwe. The board also has to be gender balanced.

Members of Parliament cannot sit on the board given their oversight role, and neither can those with criminal records. Half the board need to be men and half women, with the chairperson and deputy chairperson of different genders. 

The regulations spell out how the fund will be used by empowering the board to invest those funds not immediately required for use.

The shares held by the Government of Zimbabwe (whether in the name of the Government or on its behalf by any named Minister or Ministry) in the 20 listed companies became vested in Mutapa Investment Fund on Tuesday and form part of the initial capital of the fund without any transfer, conveyance or other instrument, reads the regulations.

Within 21 days, the shareholder register of the 20 concerns will need to show the change, and the 20 entities will need to deliver to the fund’s chief executive officer the appropriate share certificates issued in the name of the Mutapa Investment Fund.

The Fund has been found to be necessary in any economy as a way of ensuring inter-generational equity such that current wealth can be passed on to future generations.

It will become more handy given the country’s endowment with its natural resources such as gas, lithium, gold among others.

The Fund will also be used as a way to create the Government balance sheet to put value to State assets.

Herald

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