Zimbabwe's govt to privatise 20 enterprises under Mutapa

The government is considering removing the public entity status of the 20 State-owned enterprises (SOEs) that fall under the Mutapa Investment Fund, leading to debates regarding their procurement exemption.

On September 19, 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 within it. Subsequently, President Mnangagwa issued another proclamation exempting the Mutapa Investment Fund from the Public Procurement and Disposal of Public Assets Act, effectively exempting the 20 SOEs, including mines, major power stations, the National Railways of Zimbabwe, Air Zimbabwe, NetOne, TelOne, Cottco, and Zupco.

This has sparked a legal discussion about whether President Mnangagwa, through the Presidential Powers (Temporary Measures) (Investment Laws Amendment) Regulations, has the authority to amend the Public Procurement and Disposal of Public Assets Act, which is an Act of Parliament.

Allen Choruma, the permanent secretary in the Office of the President's Corporate Governance Unit, explained during the Chartered Governance and Accountancy Institute in Zimbabwe annual conference that these companies would lose their SOE status once moved to the Mutapa Investment Fund. Finance Minister Mthuli Ncube's objective is to maximize the utilization of assets to foster economic development.

A sovereign wealth fund, as defined by Investopedia, is a State-owned investment fund funded by government-generated revenue, often derived from a country's surplus reserves. Consequently, any company under the Mutapa Investment Fund is considered State-owned.

Concerns have been raised that exempting the 20 SOEs from procurement regulations could lead to corrupt practices, as procurement has been a common avenue for misappropriating government funds, according to the Auditor General's office.

Kenias Mafukidze, the CEO of Alpha Media Holdings, suggested that Zimbabwe should establish new institutions and fund them to create better institutions in the future. He emphasized the need to allocate a small portion of funds to management while dedicating the larger portion to taking risks and investing in the future.

George Guvamatanga, the Permanent Secretary of Finance and Investment Promotion, clarified that the Mutapa Investment Fund would ultimately benefit the government. He explained that the fund's capital would consist of the assets held by the SOEs, which would be overseen by the current board and subsequently managed by a team appointed by the government.