Mutapa fund conducts asset valuation
MUTAPA Investment Fund, the state-owned investment company, is conducting a valuation of its assets to determine the sovereign fund’s value, according to its chief executive, Dr John Mangudya.
In a recent interview with our Harare Bureau, Dr Mangudya said the fund had engaged an external party to assist in this process.
Mutapa is composed of assets from various State-owned entities, consolidated into a single fund to generate wealth for citizens.
Some of the entities now under the purview of Mutapa include NetOne, the National Railways of Zimbabwe, Air Zimbabwe, TelOne, Cottco, National Oil Company of Zimbabwe, Cold Storage Company, Fidelity Gold Refinery, Homelink, Zimbabwe Power Company, the Industrial Development Corporation of Zimbabwe and Hwange Colliery Company Limited, now HCCL Holdings.
“Previously, they were all stand alone companies and now they have been consolidated,” said Dr Mangudya.
“Right now, we are busy finalising and assessing the value of all the assets under the management of the fund.
“After a month from now, we will know the fund is valued at X billion dollars, which is the total value of the assets under the fund.”
Dr Mangudya said Mutapa will be able to use its balance sheet to provide capital to fund entities in need of recapitalisation.
“The balance sheet is made up of companies that are cash cows and others that need support,” the former Reserve Bank of Zimbabwe governor said.
“So, for those that need support, you can leverage on the balance sheet, get money and deploy to those where there is need for support.”
The Sovereign Wealth Fund Act (Chapter 22:20), which established the Sovereign Wealth Fund of Zimbabwe was promulgated in 2015.
Since then, the operationalisation of the fund progressed slowly as the Government was exploring various efficient ways of capitalising the fund.
The Government explored various avenues to effectively capitalise the fund.
Following comprehensive consultations with stakeholders, President Mnangagwa made a decisive move to operationalise and adequately capitalise Mutapa.
The critical decision involved amendments to the Sovereign Wealth Fund Act through Statutory Instrument 56 of 2023.
These amendments included the initial transfer of Government shareholdings in 22 entities to Mutapa.
In addition, the fund underwent a name change, transitioning from the Sovereign Wealth Fund of Zimbabwe to the current Mutapa Investment Fund as stipulated in the Mutapa Investment Fund: Presidential Powers (Temporary Measures) (Investment Laws Amendment) Regulations, 2023.
The core concept of a sovereign wealth fund is to maximise the value of these assets now termed investee or portfolio companies.
Unlike other countries that capitalise such funds with fiscal surpluses, Zimbabwe used investment-based model for Mutapa.
Previously structured as a commodity-based fund, it now operates as an investment-focused entity.
Essentially, the state-owned enterprises transferred to Mutapa are now our core investments.
The mandate is to enhance and grow the value of these companies and by transforming them into profitable entities, Mutapa aims to generate sustained returns for both present and future generations.
The strategy underpins efforts to build a substantial national savings fund, Dr Mangudya said.
Previously, the entities were under line ministries, a system often criticised for hindering restructuring efforts due to ministerial interference.
The Government will now conduct a “review” of laws governing State-owned entities under the Mutapa Investment Fund to rectify inconsistencies, eliminate overlaps and streamline operations.
The review is necessitated by the transfer of various entities to the fund, which has highlighted the need for a unified legal framework to ensure efficient management and oversight of the enterprises.
Some observers have expressed concern about overlapping of some of the laws governing these entities, arguing that they could impede efficient operations of the entities and hinder accountability. -chronicle
