Amongst the endless suggestions for reforming the Zimbabwean economy over the years, two
have received critical support. The first was the suggestion for the replacement of the Reserve
Bank by a Currency Board to reduce the fiscal activities of the former and the erratic dealing
with foreign currency matters. The second was the establishment of a Sovereign Fund.
The latter was given tentative existence through the passing of the Sovereign Wealth Fund Act
in 2014, but very little of any substance has taken place since then. This has now been
overtaken by the promulgation of the Mutapa Investment Fund, one of the earliest actions
under the recently elected government. This was done now through any amendment of the
act but through the President issuing a statutory instrument, Statutory Instrument (S.I.) 156
of 2023.
The Mutapa Investment has immediately drawn a storm of criticism, not surprisingly given the
frequent revelations of corrupt activities around the extractive industries in recent years, with
the Cartel report and the Al Jazeera report on gold smuggling notorious amongst these. In
more distant past, there was also the whole scandal over diamonds.
The point about creating a bona fide sovereign fund is to ensure that the country benefits not
merely in the present from its abundant natural (and finite) resources, but that it also provides
for future generations. Norway is the prime example of a country that has ensured that
benefits are accrued for the future, creating the largest investment fund in the world, which
stands at US$1.3 trillion in 2023.
The benefits to Zimbabwe of a genuine sovereign wealth fund cannot be overestimated,
especially in the aftermath of the election and the likely demise of the debt relief initiative. It
will be a strong demonstration of the country’s willingness to engage reliable fiscal and
economic reform, but the question that must be asked, is the Mutapa Investment Fund the
vehicle to demonstrate this?
The criticisms that have emerged since the promulgation of S.I 156 seem two-fold. The first
set revolve around the constitutionality of the Mutapa Investment Fund, one upshot of whichhas been an immediate constitutional challenge by lawyer and businessman Frederick
Nyamande. Central to this and other legal views is the removal of public accountability, the
total control of appointments by the presidency, and requirement of secrecy.
The second has been more strident and questioned the bizarre combining the shares in 20
state and parastatal bodies with a combined asset base of US$ 97.5 million. There have been
frequent comments, relevant in a country in which illicit financial flows are argued to be
common, that the new fund will facilitate these, with even arguing that this is similar to the
privatisation of assets that took place in Russia in the early 1990s.
The new initiative by the Mnangagwa has profound implications for country and require robust public
discussion. This is the aim of the Policy Dialogue and brings together an expert panel to discuss the
implications.
Convener:
Ibbo Mandaza (Director, SAPES Trust)
Moderator:
Simba Makoni (Former minister of finance and economic development 2000-2002)
Presenter:
Gift Mugano (Director, Centre for African Governance and Development, Durban
University of Technology)
Discussant:
Janet Zhou (Director, ZimCODD)
Tendai Biti (Former Minister of Finance)