RECENTLY, a report released by the International Monetary Fund (IMF) team that was in Zimbabwe raised questions on the accountability and transparency of the Mutapa Investment Fund (MIF). The Sunday Mail’s Chief Reporter DEBRA MATABVU spoke to MIF chief executive DR JOHN MANGUDYA on this and other issues.
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Q: Can you walk us through the initial planning and vision behind establishing the Mutapa Investment Fund?
A: Mutapa Investment Fund is the Sovereign Wealth Fund of Zimbabwe, which was established for the purposes of creating value and wealth for the current and future generations of Zimbabwe from the portfolio companies under its management. The overarching principle of MIF is to improve financial and economic performance across all its investee companies in order to mitigate fiscal risk, improve service delivery, contribute towards the country’s national development goals and to increase the welfare of Zimbabweans.
The objectives of the fund, as set out in Section 4 of the Sovereign Wealth Fund (SWF) Act, are (1) to make secure investments for the benefit and enjoyment of future generations of Zimbabweans, (2) to support the development objectives of the Government, including its long-term economic and social development, (3) to support fiscal or macroeconomic stabilisation, in particular to supplement (in accordance with the SWF Act and the Finance Act) the revenues of Zimbabwe when such revenues are prejudiced by the fluctuation of international prices and (4) to contribute to the revenues of Zimbabwe from the net returns on its investments in accordance with Section 21 of the SWF Act.
Q: Can you provide an insight into how the fund is managed to ensure transparency and accountability?
A: The fund is being managed in terms of the country’s laws and in terms of the supreme law of the country, the Constitution of Zimbabwe. In particular, Sections 194 and 195 of the Constitution of Zimbabwe provide the principles governing public administration, commercial viability, good corporate governance and competitive procurement system. The fund and its employees are compelled to adhere to these principles.
The fund is also governed by several statutes that include, but not limited to, the National Code of Corporate Governance, Public Finance Management Act, Public Debt Management Act, Public Procurement and Disposal of Public Assets Act and proviso thereto, relating to exemptions.
Q: How do you ensure that the fund is used effectively, and are there regular audits or evaluations of its impact?
A: The fund upholds the principle of good corporate governance practices, transparency and high level of integrity. The fund is required, at law, to produce proper accounts and keep records in respect of its activities, funds and property, including such accounts and records in terms of section 24 (2) of the SWF Act. The fund is subject to audit by an auditor registered in terms of the Public Accountants and Auditors Act and is also subject to internal audit in terms of the Public Finance Management Act.
The fund is compelled to submit a quarterly report on its operations and activities to the Minister of Finance. The fund is also required to submit to the President and the Minister of Finance an annual report on its operations and activities during the preceding year. The annual report will include the audited financial statements of the fund, an assessment of the internal and external audits and risk management and control systems in place. The Minister of Finance, in turn, is required by the SWF Act to table before Parliament all reports submitted to him by the fund no later than 30 days after receiving them or within 30 days of the first sitting of Parliament after the Minister of Finance receives them, whichever is applicable.
Q: What are the key sources of funding for the Mutapa Investment Fund, and how do you ensure long-term sustainability?
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A: The key sources of funding for the fund are dividends from its portfolio companies and management fees. We ensure that these sources are sustainable through ensuring a high performance culture for the portfolio companies under MIF.
Q: What mechanisms are in place for the public and stakeholders to track the progress and outcomes of projects funded by the Mutapa Investment Fund?
A: MIF ensures that the public is kept informed of its operations and activities through disclosures of its audited financial statements, its investment mandate and investment guidelines, value of the fund, control systems in place and list of persons holding positions relevant to the operations and performance of the fund and any other information relevant to the management of the fund. These are published on MIF’s website.
In addition, the proceedings in the Parliament of Zimbabwe are governed, inter alia, by Section 141 of the Constitution, which requires proceedings to be held in the open. The tabling of reports in Parliament by the Minister of Finance is for robust debate of reports, transparency and disclosure of information to the public. Information is further published in the Hansard, which is published on the Parliament’s website. The Journals Office at Parliament is also a repository of this information and is open to the public.
Q: Can you provide examples of success stories or key projects supported by the Mutapa Investment Fund and how they have positively impacted Zimbabwe’s economy?
A: The fund has made great strides during the first year of its operations geared to transform the economic and financial performance of portfolio companies under its purview in order to drive sustainable growth and development.
To date, the fund has completed a diagnostic assessment of its investee companies and has come up with a strategic plan to catalyse national building by the entities under MIF. For instance, the fund is closely working with the Zimbabwe Electricity Supply Authority (ZESA) to enhance energy security in Zimbabwe through various initiatives that include prepaid metering, net-metering, smart-metering and enhancing base load through the implementation of independent power producers’ projects that include the rehabilitation of Hwange Units 1 to 6 aimed at increasing electricity by around 600MW.
Other initiatives that MIF is working on with its investee companies include putting in place a package for the procurement of buses by ZUPCO (Zimbabwe United Passenger Company) to augment public transport, working with NRZ (National Railways of Zimbabwe) to rehabilitate rail infrastructure and rolling stock, promoting rewarding joint ventures, especially in the mining sector, developing sustainable operational models at Cottco, Silo Foods, Air Zimbabwe and CSC (Boustead Beef-Cold Storage Company of Zimbabwe).
The fund is also focusing on strengthening board effectiveness, performance management and client-centric across its entities. Also, we are working on enhancing value for money practices and optimising capital management and practices within the group.
