By Rutendo Matinyarare
WE had a very interesting discussion about the MIF #MutapaInvestmentFund.
In that debate, it became clear that there is little understanding of what the investment fund is, how it works, how it will be managed and the safeguards around it.
It also appeared that most people (some very educated and qualified in finance) could not differentiate between shareholding, directorship and management of a company.
All of this is because the Zimbabwean Government has not created awareness and educated Zimbabweans about the MIF, how it will function and how it will be regulated.
As a result, there is a lot of skepticism around the fund, with many perceiving the secrecy and lack of transparency around the fund as deliberate mischief to make it difficult for people to understand and for elites to potentially loot.
The prevailing questions in our debate were:
- Who will own the fund?
- Who will control the fund?
- How will the fund be administered? λ Where will the funds to run the fund come from if the current Sovereign Fund only has US$96 million?
- How will the shareholder fund the companies and what will happen to the debts of the companies?
Now, in my understanding, the MIF is a corporate body into which the Zimbabwean Government has transferred its shareholding in strategic parastatals and companies, along with their earnings, royalties from the mineral wealth of the country and the Sovereign Wealth Fund of the nation.
These assets will be managed by professional fund managers on behalf of the people, to grow the wealth.
The parastatals and companies, on the other hand, will still be directed and managed by current structures, albeit with strategic influence now coming from the new shareholder, likely to lead to some restructuring.
In our discussion, many felt that any vehicle controlling shares of public companies and interests should be owned by the Government.
However, they failed to appreciate that the Government of Zimbabwe is essentially a public institutional vehicle that can be used to control the commonwealth of Zimbabweans through bureaucratic processes regulated by statute.
Conversely, the commonwealth can also be transferred into a private company, to be managed professionally and more efficiently by fund managers, regulated by corporate governance and investment laws, on behalf of the people.
Meanwhile, the former Government-owned companies and parastatals will still be regulated by the same statutes created to govern them initially.
Amendments will be necessary regarding who they report to and protocols, in line with the change in shareholding from the Government to a private fund.
The transfer of Government companies to the control of a private fund manager, allows the ring-fencing of the proceeds of these assets from Government use, so that the proceeds can be protected for the future, as was done in Norway.
It also relieves the Government from the burden of guaranteeing and amortizing the debt and borrowing of the companies against taxpayers’ funds, as it becomes the responsibility of the fund (shareholder) to push companies to rationalize, restructure, produce, raise funds, be viable and repay their own debts through generated revenue.
Through management by exception, the shareholder (the fund and its managers) can now influence the strategic and operational direction of companies and parastatals in the portfolio. They can set strategy, performance targets, demand innovation and request accountability for capital injection, loan surety, earnings, or authority to spend on bonuses, salary increases or perks.
This is my understanding of how the MIF was set up as a shareholder managing our companies, royalties, earnings, assets and sovereign wealth fund. Consequently, these assets are no longer controlled by the government but by our Sovereign Fund trust of the Zimbabwean people.
The President of Zimbabwe, elected to represent the Zimbabwean people, remains the overseer of the investment fund, alongside the Minister of Finance and the people of Zimbabwe (Parliament, civil society), who will receive audited financials and annual reports, as explained by Permanent Secretary of Ministry of Finance and Investment Promotion George Guvamatanga.
It, therefore, follows that the President’s oversight does not necessarily make the institution a Government-controlled or owned entity, but rather a people-owned institution.
By doing so, the government no longer needs to fund the select companies, and furthermore, the private fund should be immune from the contagion of illegal western sanctions on the government.
This leaves the companies free to raise funds, retool, acquire machines, software and technology; receive export payments, loans, and open foreign bank accounts previously denied to Zimbabwean parastatals that were sanctioned because they were owned by the Zimbabwean government.
This unlocks these companies’ ability to produce for optimum performance. Nonetheless, strong safeguards are needed to protect this national treasure.
The purpose of my writing this piece is to ventilate the misunderstandings (by others and myself) surrounding the fund, address the questions raised by people and highlight the need for the Government to educate the public on the Mutapa Investment Fund and its legal workings.
Here is why the UK sanctions are not targeted
The British government has issued yet another statement explaining that their sanctions are targeted on only five individuals and one company. However, the reality contradicts their claim when examining the real reduction of Zimbabwean exports to the UK (green bar) and imports from the UK (blue bar). Zimbabwean exports have dramatically fallen from a real value of US$545 million in 1995 to less than US$15 million in 2022. These numbers demonstrate that sanctions have caused a 97 percent reduction in Zimbabwean exports to the UK and a 76.8 percent decrease in imports from the UK since the imposition of sanctions.
This unequivocally shows that UK, EU, and US sanctions on Zimbabwe have severely impacted the Zimbabwean economy.
Moreover, these sanctions remain illegal according to international law and they are not targeted for the following reasons:
1. They are unilateral and lack due process, without the involvement of the preeminent multilateral institution (the UN), which is the sole authority authorized to sanction countries after conducting human rights impact assessments.
2. The UK’s claim that these sanctions target only five individuals and one company is misleading. This amounts to punishment without a fair trial, making these so-called targeted sanctions illegal and a violation of the universal bill of human rights.
3. Sanctions affect more than the specified five individuals and one company, as UK banks such as Westiminister PLC and HSBC closed the bank accounts of the Reserve Bank of Zimbabwe between 2008 and 2016 and have not reopened them since. This indicates that UK sanctions also affect the Reserve Bank of Zimbabwe which belongs to all Zimbabweans.
4. Standard Chartered, Barclays, National Westminster Bank, FBN, HSBC, and Lloyds Bank have closed branches in Zimbabwe and terminated corresponding banking relationships with all Zimbabwean banks since 2008, as late as 2023 when Standard Chartered ceased operations in Zimbabwe due to UK sanctions and the enforcement of US sanctions. This again means UK banking sanctions and overcompliance are on all Zimbabweans.
5. Zimbabwe’s exports to the UK significantly decreased from their peak of US$299 million in 1995 to a mere US$11 million in 2021, demonstrating that UK and US sanctions have totally impacted Zimbabwe-UK trade, resulting in an over 83 percent decline in trade in real terms.
6. In contrast, UK exports to Zimbabwe peaked in 2012 and 2013 under the Government of National Unity (GNU) when the UK exported over US$1.5 billion worth of petroleum products to Zimbabwe.
7. The UK’s Department for International Development (DFID) has deliberately denied Zimbabwe aid for programmes such as treating fruit flies and others over the past decade.
8. Several companies, including Sage, UK insurers, and auctioneers, continue to restrict services to Zimbabweans that include the purchase of second-hand ambulances, medical equipment, and machinery due to UK sanctions. This assessment affirms the devastating impact of UK sanctions on Zimbabwe and the UK’s complicity in the resulting economic hardships in Zimbabwe.
Rutendo Matinyarare is Chairman of ZASM and Founder of Frontline Strat Marketing Consultancy.