Source: Mutapa Investment Fund disburses US$40m to boost State-owned enterprises – herald
Martin Kadzere
Business Reporter
MUTAPA Investment Fund has disbursed at least US$40 million to support companies in its portfolio as it continues to structure funding arrangements for other entities, the entity’s chief executive officer Dr John Mangudya has said.
Companies that have benefited from the funding include the Cold Storage Company (CSC) which recently emerged from corporate rescue, ZUPCO, Silo Foods and the National Railways of Zimbabwe (NRZ) among others.
Dr Mangudya made the remarks yesterday in an interview on the sidelines of a public lecture he delivered at Zimbabwe National Defence University.
“We want to improve the performance of these entities in line with the national agenda,” Dr Mangudya said in apparent reference to the National Development Strategy 1 and 2 and Vision 2030.
Mutapa is the country’s sovereign wealth fund established by an Act of Parliament.
It is a strategic investment arm of the Government which was capitalised with shares in selected State-owned Enterprises and investments to transform revive and strengthen the performance of these entities.
The fund manages a broad portfolio of companies from different sectors of the economy divided into clusters including mineral resources energy and trading information communication technology transport and logistics agriculture and industries financial services as well as real estate.
Dr Mangudya said transforming state-owned entities into “cash cows”—highly profitable and financially efficient enterprises — was critical to generating significant benefits for the economy.
He added that the success of this strategy means the SOEs would transition from being a fiscal burden to becoming economic assets.
By becoming self-sustaining they will no longer require Government bailouts or subsidies thereby freeing up significant public funds that can be strategically reallocated towards essential infrastructure projects and critical social services across the country.
In his presentation Dr Mangudya said engagement with potential investors and financial partners with a view to capitalise some of its portfolio companies was ongoing.
He also noted that since its inception the fund has made significant progress in addressing governance challenges.
This includes appointing boards and senior management based on merit and ensuring the timely production of audited results.
Dr Mangudya stated that a major missing link in the viability of state-owned enterprises is the lack of strong corporate governance which has resulted in critical aspects of it being overlooked.
This issue has also been consistently highlighted in the Auditor General’s reports which routinely point out deficiencies in corporate governance within most of the State-owned Entities.
With improved performance Dr Mangudya said the fund would pay dividends to the Treasury out of the earnings received from its investee companies.
The funds would then be directed toward socio-economic programmes. One of the critical objectives of the fund Dr Mangudya said will be the establishment of a stabilisation fund.
This fund aims to mitigate against and support the country’s resilience in the face of unforeseen challenges.
It will function as a buffer to be used during unpredictable events such as natural disasters and becomes relevant given the negative impacts currently being caused by climate change.
“The establishment of the Mutapa Investment Fund represents a transformative opportunity for Zimbabwe to optimise and leverage its sovereign assets to achieve improved financial performance improved service delivery improved corporate governance and improved contribution to Zimbabwe,” Dr Mangudya said.
In many countries sovereign wealth funds are capitalised using fiscal surpluses an arrangement that was initially envisioned for Zimbabwe before Mutapa’s establishment. The original intention was to invest the country’s balance of payments and fiscal surpluses into the fund. However this approach never materialised because the required surpluses were not available. Consequently the Government amended the law to transition the fund’s model. Previously a commodity-based sovereign wealth fund Mutapa is now structured as an investment-based sovereign wealth fund.
The fund is benchmarked against similar entities including the Ethiopian Investment Holdings the Mubadala Investment Authority of Abu Dhabi and Temasek of Singapore among others.
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