PRESIDENT Emmerson Mnangagwa has kept the Mutapa Investment Fund (MIF) under his purview, as concerns rise that housing 20 state firms under the asset may trigger massive corruption.
A week ago, Mnangagwa reserved to his office 13 laws, including the Sovereign Wealth Fund (SWF) Act, through Statutory Instrument (SI) 189 of 2023. In September, Mnangagwa gazetted SI 156 of 2023, which changed the SWF’s name and moved 20 state-owned enterprises (SOEs) to fall under the Fund’s stewardship. The changes were made through amendments to the SWF Act.
A week later, Mnangagwa issued another proclamation exempting MIF from the Public Procurement and Disposal of Public Assets. By extension, the 20 SOEs – including National Railways of Zimbabwe, Air Zimbabwe, NetOne and TelOne - were also exempted. In an interview with the Zimbabwe Independent this week, legal practitioner and former finance minister Tendai Biti accused Mnangagwa of ‘asset grabbing’.
“The SI you are talking about and the Government Gazette, which speaks of 13 SIs, being given to the President (shows) the creation of an imperial President,” Biti said.
“The concentration of power on one individual is unacceptable and is against our own Constitution.”
He alleged MIF represented public asset stripping.
“Three things are happening here. The first one is obviously the asset stripping of Zimbabwe, which is being fomented by the creation of MIF, and the opaqueness around the Fund,” Biti said.
“As I have said publicly, MIF is illegal because the President cannot enact laws and avoid Parliament.
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“This is in breach of Section 134 of the Constitution of Zimbabwe. In any event, the Presidential Temporal Powers Measures Act can only be used in emergency, when no other law provides for that. This was not an emergency.”
Assets controlled by the 20 SOEs run into hundreds of millions of United States dollars. In a recent analysis of amendments to the SWF Act, legal think-tank, Veritas concurred with Biti.
“The President’s amendments to the SWF Act will do nothing to remedy the defects in the Act . . . Instead, they will increase the President’s personal control over the Fund,” Veritas said.
“The amendments were made under the Presidential Powers (Temporary Measures) Act so they will last for only six months and, if they are to be made permanent, will have to be embodied in an Act of Parliament.”
Veritas said legislators should raise governance issues over amendments to the Act and should also refuse to pass them into law.
“One of the first tasks of the new Parliament’s Public Accounts Committee should be to question everyone involved in the Fund, from the minister downwards, to find out what the Fund has been doing since it was established in 2015, what its current assets are, who has been managing it, why its managers have flouted the clear provisions of the law, and how the President’s amendments can possibly improve the situation,” Veritas noted.
It said the way in which SWF has been managed since 2015 showed disregard for the law.
“It may be an exaggeration to call the Fund a ‘looting machine’ but without full and public disclosure of what was paid into the Fund and what has been taken from it, it is impossible to tell if that description is justified or not,” it added.
Veritas said the Auditor-General was supposed to audit SWF and send reports to the Minister of Finance.
However, this had not been happening.
“The SWF Act is generally a sound piece of legislation, with provisions ensuring that the board manages the assets of the Fund prudently and with the utmost transparency,” Veritas said.
“Shockingly, however, those provisions have been almost completely ignored ever since the Act came into operation in June 2015.
“Under a new Section 20A, which SI 156 of 2023 will insert in the Act, the Fund will have the right to transfer money in and out of Zimbabwe without having to comply with exchange control laws.
“The Reserve Bank will however be able to restrict the Fund’s transfer if the country encounters serious balance of payments or financial difficulties,” Veritas added.
It further stated that the provision had worried many commentators, and rightly so.
“If we are to have exchange control laws at all – and a respectable case can be made for abolishing them – then the laws should apply to everyone,” Veritas said.
"No justification has been given for exempting the fund. The lack of transparency, the secrecy, that has attended the fund’s activities so far suggest that the exemption will be misused and that the fund may become a conduit through which the country’s wealth is externalised.”
