Zimbabwe Government’s Plan to Privatize 20 State-Owned Enterprises Under Mutapa Investment Fund

by Ikeoluwa Ogungbangbe

The Zimbabwean government is set to change the status of 20 State-owned enterprises (SOEs) listed under the Mutapa Investment Fund, sparking discussions about their exemption from procurement regulations.

On September 19, Zimbabwe’s President, Emmerson Mnangagwa, issued Statutory Instrument 156 of 2023, transforming the Sovereign Wealth Fund of Zimbabwe into the Mutapa Investment Fund and incorporating 20 SOEs under its umbrella.

Subsequently, Mnangagwa issued a proclamation exempting the Mutapa Investment Fund from the Public Procurement and Disposal of Public Assets, effectively extending the exemption to the 20 SOEs. Among these SOEs are mines, major power stations, the National Railways of Zimbabwe, Air Zimbabwe, NetOne, TelOne, Cottco, and Zupco.

However, this has triggered a legal debate concerning Mnangagwa’s authority to amend the Public Procurement and Disposal of Public Assets Act through the Presidential Powers (Temporary Measures) (Investment Laws Amendment) Regulations.

Speaking at the Chartered Governance and Accountancy Institute’s annual conference in Victoria Falls, the Permanent Secretary in the Office of the President’s Corporate Governance Unit, Allen Choruma, revealed that these firms would lose their SOE status.

Finance Minister Mthuli Ncube’s rationale behind this move is to maximize the potential of these assets. Choruma explained, “The rules for the fund are being formulated. What we have now is just the legal framework. The intention is to transfer these entities, known as prescribed entities, into the Mutapa Investment Fund, causing them to lose their public entity status as they become part of this consolidated fund.”

A sovereign wealth fund, as defined by Investopedia, is a State-owned investment fund funded by the government’s surplus reserves. Therefore, any company under the Mutapa Investment Fund is considered State-owned.

Concerns have arisen that exempting these 20 SOEs from procurement regulations might foster corruption, as procurement has historically been a channel for misappropriating government funds, according to the Auditor General’s office.

Kenias Mafukidze, CEO of Alpha Media Holdings, suggested that Zimbabwe should establish new institutions and fund them to build better institutions. He proposed allocating a smaller portion of the fund to SEOs’ management and dedicating a larger portion to ventures with potential for significant growth.

Finance and Investment Promotion Permanent Secretary George Guvamatanga clarified that the government would remain the ultimate beneficiary of this fund. He noted that while these SOEs might have underperformed and liabilities, they also possess assets that would constitute the initial capital of the fund. The Mutapa Investment Fund will remain wholly owned by the government, with the current board overseeing its operations and the subsequent management team.

SOURCE: NewsDay 

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