Mnangagwa consolidates grip over investment fund

President Emmerson Mnangagwa has retained control of the Mutapa Investment Fund (MIF), raising concerns about potential widespread corruption resulting from housing 20 state-owned enterprises (SOEs) under this asset. A week ago, Mnangagwa reserved 13 laws, including the Sovereign Wealth Fund (SWF) Act, using Statutory Instrument (SI) 189 of 2023. In September, he published SI 156 of 2023, which not only changed the SWF's name but also transferred the oversight of 20 SOEs to the Fund. These changes were made through amendments to the SWF Act.

A week later, President Mnangagwa issued another decree exempting MIF from the Public Procurement and Disposal of Public Assets. Consequently, the 20 SOEs, such as National Railways of Zimbabwe, Air Zimbabwe, NetOne, and TelOne, were also granted exemptions. In an interview with the Zimbabwe Independent, legal practitioner and former finance minister Tendai Biti accused Mnangagwa of engaging in 'asset grabbing.'

Biti stated, "The SI you are referring to and the Government Gazette that mentions the 13 SIs being granted to the President signify the creation of an imperial presidency." He emphasized that the concentration of power in one individual is unacceptable and contrary to the country's Constitution. Biti alleged that MIF represented the illicit stripping of public assets, asserting that it is illegal as the President cannot enact laws without involving Parliament, which violates Section 134 of the Constitution of Zimbabwe. He further contended that the Presidential Temporal Powers Measures Act can only be employed in emergencies when no other law applies, and this situation did not qualify as an emergency.

The assets managed by the 20 SOEs are valued in the hundreds of millions of U.S. dollars. Legal think-tank Veritas supported Biti's concerns, stating that the President's amendments to the SWF Act do not rectify the Act's deficiencies but rather increase the President's personal control over the Fund. These amendments were enacted under the Presidential Powers (Temporary Measures) Act, meaning they will be in effect for only six months and will need to be incorporated into an Act of Parliament for permanent implementation.

Veritas recommended that legislators raise governance issues related to these amendments and refuse to pass them into law. The organization suggested that the Public Accounts Committee of the new Parliament should investigate the Fund's activities since its establishment in 2015, the current state of its assets, management, and the reasons behind the violation of legal provisions. Additionally, Veritas noted that the Auditor-General was supposed to audit the SWF and provide reports to the Minister of Finance, which had not been happening.

The SWF Act is generally considered sound legislation with provisions for prudent asset management and transparency. However, these provisions have been largely ignored since the Act came into operation in June 2015. A new Section 20A, to be added by SI 156 of 2023, will grant the Fund the right to transfer funds in and out of Zimbabwe without complying with exchange control laws. The Reserve Bank will retain the authority to restrict such transfers in the event of significant balance of payments or financial difficulties. Veritas expressed concern about this provision and argued that if exchange control laws are to be in place, they should apply universally without exceptions. The lack of transparency and secrecy surrounding the Fund's activities suggests that this exemption may be misused and the Fund could serve as a conduit for externalizing the country's wealth.