Recent reports imply that a massive US$1.6 billion has been secretly paid out to unnamed shareholders from Zimbabwe’s sovereign wealth fund, which is a startling disclosure that might put at risk the country’s debt restructuring talks. The payments are allegedly connected to Kudakwashe Tagwirei, a mining industry magnate with significant holdings and a well-known supporter of Zanu PF, the ruling party. This development calls into serious doubt the openness and governance of Zimbabwe’s financial operations in the process of stabilizing its economy.
The fund, which was recently renamed to Mutapa Investment Fund by President Emmerson Mnangagwa, was apparently used to channel payments to shareholders of Kuvimba Mining House. Kuvimba owns and operates multiple mining sites across Zimbabwe, including those extracting gold, lithium, nickel, and platinum. The Sentry, an investigative and policy organization focused on halting exploitative practices globally, detailed these transactions in their latest report.
Despite Tagwirei’s denials of ownership in Kuvimba, The Sentry report of 2021 highlighted his secret possession of up to 35% of the mining conglomerate. Both Tagwirei and Kuvimba have consistently refuted claims of his ownership, yet authorities have remained tight-lipped about the identities of the recipients of the US$1.6 billion for the 35% stake.
This massive payout not only questions the valuation of Kuvimba but also implicates the government in potentially overvaluing the shares to benefit a select few. According to The Sentry, a US$1.6 billion valuation for a 35% stake places Kuvimba’s worth at around US$4.6 billion, significantly higher than the US$1.5 billion valuation reported by the government in 2022. This disparity points to a concerning share value inflation that may have been planned to embezzle large quantities of public funds.
President Mnangagwa made this transfer possible by amending the Sovereign Wealth Fund of Zimbabwe Act last year through a statutory instrument. By purposefully excluding the fund from the Public Procurement and Disposal of Public Assets Act of the nation, the change evaded the standard oversight procedures.
These secret transactions have far-reaching consequences. They occur while Zimbabwe and the African Development Bank (AfDB) are closely collaborating to manage a challenging debt restructuring process. According to recent reports, Zimbabwe’s debt has increased to US$21 billion, with fresh debt representing 5% of the country’s GDP. The claimed purpose of these indebtedness was to enable these questionable payments to shareholders.
Sovereign wealth funds are fundamental to the idea that they should protect and grow national resources for the good of all residents. But The Sentry’s findings point to a clear divergence from this objective, with large sums of money appearing to have been taken out of circulation to enrich a select group of people at the expense of the Zimbabwean people. The consequences of this are severe since taxpayers are held accountable for debts with unclear and questionable grounds.
Demands for thorough audits and open investigations of the transactions of the Mutapa Investment Fund have been raised in response to the study. We implore the Parliamentary Public Accounts Committee and the Auditor-General to closely examine these transactions and determine if they are consistent with the interests of the national economy. It is also recommended that banks and other financial institutions closely monitor any transactions they have with companies offering to sell reduced Treasury notes, particularly those connected to this fraud.
As Zimbabwe struggles through these difficult economic times, accountability and transparency are still crucial. In an effort to make sure that all interested parties, including civil society, are aware of and actively involved in finding long-term solutions to Zimbabwe’s economic problems, the Sentry has called for the AfDB-led structured talks to include discussions on these new loan issuances.
