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Nelson Gahadza

Senior Business Reporter

Government has clarified incorrect assertions that State-owned enterprises (SOES) whose shares are vested in the renamed Mutapa Investment Fund are now exempt from the provisions of the Public Procurement and Disposal of Public Assets Act.

Following the publication of an extraordinary Government gazette on the PRAZ Act last Friday, there have been incorrect claims in certain quarters, including news media, that had largely misinterpreted the contents and implications of new legal provisions on the Mutapa Investment Fund.

Finance, Economic Development and Investment Promotion permanent secretary Mr George Guvamatanga told delegates attending this year’s edition of the Zimbabwe Economic Development Conference in Victoria Falls yesterday that the statutory instrument, which brought about the provisions, amending the Sovereign Wealth Fund of Zimbabwe (SWFZ) Act, also amended the Public Procurement Act and Disposal of Public Assets Act.

He said Section 3 of the SWFZ Act already dealt with the issue of which institutions may be accorded exemptions, and that there was nothing new as the legal provisions were already in place before the promulgation of the latest amendments.

“So, that amendment has made it possible that these entities that operate in competitive markets may be accorded an exemption from the application of the Procurement Act.

“Therefore, on Friday, President Mnangagwa exempted one entity, which is the Mutapa Investment Fund, from the application of the procurement law,” he said.

Mr Guvamatanga said that in order to clear the air, in terms of the law, as contained in the general notice published last Friday, the exemptions apply only to the fund and not to any other entities listed on the schedule of the recently published SI.

“The fund merely owns shares in those entities but does not change their legal character or separate legal entities distinct from the fund. So, all these noises that all the institutions have been exempted from are not correct,” he said.

The fund Mr Guvamatanga, by its nature, would operate and compete in competitive markets, both local and international, competing against private and agile equity funds.

He said that as a result, the fund will need to be quick, efficient, and cost-effective, and in some instances, by its nature, it will be involved in market-sensitive transactions, which would require such transactions to be handled differently.

“As such, it was important to place it on par with its peers. The fund, through its structures, will be governed by best-practice rules and procedures in the area of procurement.

“The institutional framework introduced by the changes made in the Act is designed to provide a robust organisational design to enable it to achieve its objective as stated in the Act,” said Mr Guvamatanga.

He noted that from a reporting perspective, the fund would be required 60 days after the end of each financial year to submit to the President and to the relevant minister an annual report on its operations and activities for the presiding year, and the reports would be shared publicly.

Through Statutory Instrument (SI) 156 of 2023 gazetted last Wednesday, President Mnangagwa used Presidential Powers (Temporary Measures) (Investment Laws Amendment) Regulations, 2023, to change the name of the fund.

The fund is a state-owned investment entity established from the balance of payment surpluses, official foreign currency operations, the proceeds of privatization, Government transfer payments, fiscal surpluses, and resource earnings.

It was created in 2014 following the enactment of the Sovereign Wealth Fund Act.

Mr Guvatanga said the Government was determined not only to earn a return on its investments, but also to create employment, operate profitably, and contribute to the economy.

“The Act was amended in terms of which certain shares that the Government owned in various companies are now vested in the sovereign wealth fund created under the Act, which has now been renamed the Mutapa Investment Fund.

“These funds form part of the initial capital for the fund. They might not be performing well and have liabilities, but they also have assets, so these assets form the initial capital of the fund,” said Mr Guvamatanga.

He added that the fund itself is wholly owned by the Government, albeit managed by a board, and as such, the ultimate beneficial owner of the shares remains the Government.

Mr Guvamatanga added that the current board of the fund will be enhanced with a skills mix to effectively oversee fund operations, and an appropriate substantive management team will be appointed thereafter.

The 20 companies whose shares were vested in the fund include Zesa Holdings, Telone, POSB, Zupco, Netone, Powertel, Air Zimbabwe, Hwange Colliery, Cottco, and Air Zimbabwe.

Analysts have since said the move was long overdue, as management of the state entities will fall under one professional agency.