By Rutendo Matinyarare
THE Mutapa Investment Fund (MIF) is the Sovereign Wealth Fund of Zimbabwe, established by the Sovereign Fund Act, Chapter [22.20], as amended.
It is the strategic arm of Government, capitalised with the transfer of strategic State-owned enterprises and investments.
What makes the MIF unique is that, unlike the Norwegian Sovereign Wealth Fund, it is not a resources-based wealth fund. Instead, it is a diversified investor in various sectors, including mining, real estate, financial services, logistics, food and retail. This diversification ensures the portfolio is not affected by commodity price shifts, insulating the Fund from market turbulence and allowing Government to play a pivotal role in growing critical sectors of the economy.
This approach mirrors the Ethiopian Investment Holdings (EIH), the biggest Sovereign Wealth Fund in Africa at US$150 billion, with other 30 State-owned companies under its management. EIH grew Ethiopian Airlines into the biggest airline in Africa, with a revenue of over US$6 billion every year. It’s also similar to the Investment Corporation of Dubai, the fourth biggest Sovereign Wealth Fund in the world, that grew Emirates Airlines into one of the most profitable airlines in world.
The purpose of the Mutapa Sovereign Wealth Fund (MIF) is to harness the wealth-generating potential of Zimbabwe’s resources, companies as well as investments, and to strategically re-invest the proceeds. This maximises returns and leverages growth opportunities, aiming to make Zimbabwe an upper-middle income country by 2030.
As of April 30 2024, the MIF took over the shares of the Government in several parastatals. With this, the Fund began reforming these companies to ensure proper corporate governance and skilled boards, transforming them into centres of excellence, economic dynamos and centres of technological advancement and industrialisation, similar to the approach of China’s Sovereign Wealth Fund.
The objective of the MIF is to create a substantial and sustainable wealth reserve for Zimbabwe. This reserve will drive social development, economic advancement and competitiveness, enhancing the country’s prosperity and securing a brighter future for its citizens in the medium to long term.
To drive investment, technology transfer and industrialisation, the MIF has taken over companies like Kuvimba, which includes strategic assets like Sandawana Mines. The Fund has over 30 strategic investee companies in resources, industry, logistics, energy, trade, food processing, infrastructure, real estate and financial services. This follows the model of the Singaporean, Chinese, Ethiopian and Japanese investment funds, which are diversified rather than solely resource-dependent. There are also over 30 subsidiaries in various sectors.
The Fund’s investment strategy is a self-sustaining model centred around insurance, financial services and real estate companies like ZIMRE, which will be the investment engine of the portfolio. The concept of putting insurance companies at the centre of the investment strategy is a proven model used by Warren Buffett with Berkshire Hathaway.
By having a diversified insurer like ZIMRE, Mutapa has a capital generator, with 80-85 percent of the monthly premiums becoming passive income to fund the business’s revenue generators. ZIMRE not only provides insurance cashflow but also brings a portfolio of strategic subsidiaries in the food value chain.
Meanwhile, Kuvimba, which holds Sandawana and GDI, has over US$1 trillion in proven mineral reserves, including gold, chrome, platinum, nickel, iron ore, lime and lithium mines. This is the proverbial gold mine in the MIF portfolio. Just one mine in this portfolio has over 700 000 tonnes of lithium stockpiles above ground, worth US$210 million at US$300 per tonne. ZimAlloys, also part of the portfolio, is not just mining chrome but it’s renovating its smelter to start producing chrome concentrate this year.
The administration of the Fund lies in the hands of an eight-member board of experts in finance, economics, deal structuring and law. Board members are appointed by the President in consultation with the Finance Minister. The board comprises an equal number of women and men, with a female chairperson and a male deputy; and when change occurs, the inverse may occur, to ensure gender parity.
The President, in consultation with the Minister of Finance, also appointed a CEO, Dr John Mangudya, who will serve a five-year term, renewable for another five years if his performance is satisfactory. Dr Mangudya, in turn, in consultation with the board, appointed a chief investment officer (CIO) responsible for creating the investment strategy and training financial analysts and investment experts. The CIO has a five-year renewable tenure based on satisfactory performance.
With the Fund’s assets and underground reserves exceeding US$1 trillion, it is now the skill of this team that should steer this endowment to ensure that these reserves turn the MIF into one of the world’s biggest funds in the next few years.
Accountability of the Fund is established in sound corporate governance, based on performance-oriented KPIs for the fund managers. The CEO and CIO have limited terms, with performance reviews determining renewals. The board’s performance is reviewed by the President and the Minister of Finance. Within 60 days of the year-end, the board must present an annual report on the Fund’s performance to the President and the Minister of Finance. Additionally, the Fund is committed to world-class leadership by attracting top talent.
Any money made by the Fund must be re-invested or saved in suitable investments worldwide. The President and Finance Minister or the executive, are accountable to Parliament, where they can be questioned on the Fund’s performance and running.
The MIF is one of the greatest developments in Zimbabwe. Over time, it will generate significant value and financial reserves to fund and lend money to Zimbabwean businesses, ensuring a bright future for the country.
Rutendo Matinyarare is chairman of the Zimbabwe Anti-Sanctions Movement (ZASM).
