via Sovereign Wealth Fund Act takes effect | The Herald 12 November 2014
Legislation to establish the Sovereign Wealth Fund is now in place following the gazetting of the Sovereign Wealth Fund Act on Monday, a landmark development which seeks to establish a facility whose objective is to reserve income from the country’s finite mineral resources for the benefit of future generations.
The fund will be driven primarily by 25 percent of all royalties on mineral exports, which will be deposited, along with special dividends on the sales of diamonds, gas, granite and other minerals through the Zimbabwe Mining Development Corporation.
The Reserve Bank of Zimbabwe will be the primary custodian of the fund.
A board to govern the fund, made up of nine members, including a chairman and CEO, will soon be appointed by the Ministry of Finance, with the CEO post carrying a maximum term of five years.
The Ministry of Finance said the objectives of the fund are to make secure investments for the benefit and enjoyment of future generations and to support the development objectives of the Government, including its long term economic and social development.
“This development constitutes a significant milestone in the attainment of the goals of Zim-Asset and more particularly, in ensuring that the country leverages on its rich natural resource endowment for sustainable development,” said the ministry.
Economic analysts welcomed the gazetting of the legislation, saying that it was long overdue.
Economist and businessman Joseph Sagwati said the fund will act as a State pension utility that will invest in local and regional bourses. This would be with a view to hedging against the expropriation of the minerals and welfare challenges from local market gyrations.
“Belated though it is, the constituting of a Sovereign Wealth Fund to harness mining resources into a structured investment vehicle is a welcome development,” said Mr Sagwati.
The move to base the fund on minerals is a step in the right direction because all this does, in comparison to other funds, is that it appropriates a portion of the royalties away from recurrent expenditure and towards capital expenditure, said another economist.
COMMENTS
What an excellent idea! With the country drowning in extra money, it’s wise to put some of it away for a rainy day. Let’s also make sure that the board of directors get shiney new cars and mega salaries, so that they are good guardians of all this excess wealth!
So just one more fund to loot from…….sorry, what am i saying,; there’s no justification for such cynicism; no past actions to give so little hope; no integrity erosion to merit a scratching of the head wondering where this is going. Great concept but the wrong people setting it up. How many fat salaries will be divied out to those “managing” the fund.
This is a test.
Well the economy has really prospered from the diamonds and other mining activities so no doubt this fund will be run with integrity and intelligence and prosper the country greatly! And then I woke up……
Ha ha ha another fund that will be looted and just another way of generating income to over pay the so called custodians of this fund, how can we even have a fund when Zimbabwe owes so much money to the IMF, the Chinese, etc. pay your debts off first!
The “future generations” in this article must be reffering to the geriarics wife and children to loot
The problem is that there is no sovereign wealth to invest. This is just another vehicle for transferring public money into the pockets of Mugabe’s supporters. As usual, there is no transparency at all. By continuing to create more patronage of this sort, the country has less credibility with investors.
In developed countries, financial managers typically gobble up 1-4% of annual administrative expenditures for a wealth fund. My guess is that Mugabe’s version will take 90% of income to manage the remaining 10%… what’s that saying about putting lipstick on a pig? It doesn’t change the fact that it’s still a pig.
Everyone knows it is just a fund for the connected boys!The politically connected will benefit and no one else!This is just another example that our leaders can’t be taken seriously ,Zimbabwe is fast despairing down the abyss!