Online Reporter
The new management of the expanded Mutapa Investment Fund, Zimbabwe’s sovereign wealth arm built on 30 State-owned companies, has been cleaning up the very variable range of its portfolio it took over in 2024, with, for example, annual audits of all 30 entities and the fund as a routine.
While some of the State-owned companies making up the fund being properly managed as they were moved from the operational control of line ministries to the dedicated sovereign wealth fund, there were many falling behind on the required audits and with dubious gaps in the operational and financial management.
That was one of the reasons why President Mnangagwa decided on the major reforms of 2024, about 20 months ago, bringing the whole gamut of State-owned enterprises under the control of the fund and putting in the retiring Governor of the Reserve Bank of Zimbabwe and long-service banker, Dr John Mangudya, as chief executive.
Line ministries, which were controlling many of the entities before, were frequently not equipped with the skills and expertise needed to run a major company, having other responsibilities where the special skills of civil servants and ministers were a major plus.
Dr Mangudya and his management team were different, and the results are now starting to come through.
For a start, the audited financial statements mean that Mutapa can pinpoint exactly what it has under its roof, how well each unit is doing, where there are gaps in investment, and often in the past State-owned entities had seen their capital assets being run down, and what was needed to put the bits back together.
This was to ensure the owners of the fund, the people of Zimbabwe, had a well run portfolio building up our collective wealth.
The starting point, obviously, was to find out in something approaching real time with updated figures exactly what was already there, what revenues were being generated and what the expenses were.
Profits were the most obvious source of new capital, but it also became apparent that innovative deals with the private sector could provide welcome shortcuts so long as these were carefully worked out.
Often the preference has been for the less permanent arrangements of build-operate-transfer rather than permanent ceding of shareholding.
The investor, and in some cases very large sums are needed, gets the advantage of getting their money back, with a reasonable return in finite time, while the people of Zimbabwe get the advantage of having within a few years full control and use of the profits.
But investors obviously would be turning their backs unless they were seeing a total commitment to high level management, excellent integrity and staffing of the many specialist companies under Mutapa with people who knew fairly precisely what was needed and could be trusted to push ahead with efficient operational control.
This is the position we have now reached and why it is now possible to move ahead. The National Railways of Zimbabwe have already gone into partnership with Zimasco, the major chrome smelter and a component of a much larger mining group to rehabilitate essential rolling stock and locomotives so the high bulk cargoes of a mining giant can be moved as cheaply and efficiently as possible.
Road transport is great for perishable lightweight products, but not so wonderful for the really heavy bulk loads.
Other railways deals are now winding their way through negotiations as Mutapa pushes ahead with restoring the NRZ to its central position in the movement of a rapidly growing range of raw materials and industrial products.
Suppliers, partners and investors are interested under the new set up and are far more interested in negotiating deals that give them their reasonable, but not exploitative profits.
Mutapa backing for Zesa has meant that those seriously interested in supplying and commissioning the new and rehabilitated equipment, mainly what amounts to replacing the six 1980s units at Hwange Power Station, have been able to offer decent deals that are affordable with minimum risks.
Zesa’s equipment manufacturing subsidiary is now moving rapidly ahead as well. Accountants and financial management might be less exciting in the eyes of engineers, but they need that backing to realise their own dreams.
Now Mutapa is moving ahead into expansion of its mining portfolio. The range of companies producing gold, coal, lithium and other minerals have been accurately mapped and investments of up to US$950 million will allow these companies, generally already operating profitably, to expand and offer more value.
This time round Zimbabwe does not have to accept some of the deals proposed in the past to compensate for what was seen as very high levels of risk.
This opens doors to the sort of deals that bankers generally arrange to mobilise finance.
While the concept is routine, in the new sort of environment, Mutapa is looking for higher levels of innovation than what has been seen in the past.
A sovereign wealth fund is, as its name suggests, a creator of wealth for the whole population. It can also be in areas where either some sort of monopoly or near monopoly is required, and the railways track and signals systems fall into this category, or it can be a way of mobilising capital resources available to grow the economy.
So we benefit two ways — more jobs and a larger gross domestic product — along with that base of national assets properly managed that will provide ever more income for growth in the future.
