Mnangagwa used the Presidential Powers (Temporary Measures
Act) to rename the Sovereign Wealth Fund to Mutapa Investment Fund (MIF).
In the process, he transferred shareholding of state-owned
enterprises that include the Cold Storage Company, NetOne, TelOne, Powertel,
Air Zimbabwe, Hwange Colliery Company, Cottco, POSB and Zupco to the MIF.
The fund is empowered “without restriction or delay” to
move foreign currency outside the country to pay expatriates or “in connection
with investment of the fund,” among other controversial privileges.
Former Finance minister Tendai Biti said Mnangagwa does not
have powers to make law as this was the preserve of Parliament.
Biti said the statutory instrument used to change the name
of the Sovereign Wealth Fund and to move the shareholding of the state enterprises
was illegal as the president had usurped Parliament’s powers.
“Secondly, there is
a problem of simply usurping state assets and taking them from the state,
particularly the government which does not have a clean record of
transactions,” he said.
“Those assets should have remained administered by
line-ministries and if there is any intention to dispose of them you go through
a transparent process of privatisation.
“This new vehicle allows money-laundering. Zimbabweans are
going to be prejudiced.”
Businessman and former banker Nigel Chanakira said the
president should have involved Parliament before making the far reaching
decision.
"The process is too important for the executive to go
it alone without legislative debate," Chanakira told The Standard.
"Considering the implications to public finance
management, parliamentary debate would have been advisable before
commitment."
Veteran economist Tony Hawkins said the government has
never understood the role of a sovereign wealth fund.
Hawkins said countries such as Norway, Botswana and others
in the Middle East used sovereign wealth funds to utilise domestic savings to
diversify their economies by investing offshore.
"The inclusion of loss-making parastatals is just one
more attempt to hide public finances from parliamentary scrutiny and pretend
the national budget is in surplus when it is not," he said.
Hawkins said Finance minister Mthuli Ncube was claiming
that there was a budget surplus when public debt had increasing to $144
trillion.
"He cannot expect anyone to take him seriously.
Zimbabwe has a longstanding record of very low domestic savings and investment,”
he said.
Hawkins said the purpose of sovereign wealth funds was to
use domestic surpluses from extractive industries like mining, which are
depleting national wealth to diversify the economy.
"The government does not understand this and ignores
the country's massive dependence on a handful of mineral exports and tobacco
most of which are environmentally unfriendly,” he added.
"It also believes the role of a sovereign wealth fund
is to attract foreign savings rather than generate increased domestic
savings."
Economist Gift Mugano said transferring shareholding of the
parastatals into the MIF would have made sense if they were profitable.
“Our parastatals are not working and this is more of taking
a credit from the right hand and giving it to the left hand in terms of
ownership because the government owns these parastatals and now Mutapa
Investment Fund now owns them temporarily,” Mugano said.
“It would make sense if the parastatals are profitable and
they declare their dividends with their shareholder who is the Mutapa
Investment Fund.
“With that then that can be called an investment fund for
the future generation. Naturally, talking about those funds, they work very
well in minerals.”
Former Industry minister Welshman Ncube said although there
was nothing wrong in renaming the Sovereign Wealth Fund, the move would not
solve anything as long as the government does not address fundamental issues
affecting the economy.
“Generally, the
whole point of a sovereign fund is to set up a fund so that it raises money and
it can invest that money in strategic business or industries which are in the
national interest to make sure that they are properly capitalised. That’s
normal,” said Ncube, who is also a constitutional law expert.
“But the renaming of the fund doesn’t change anything. The
fundamental question remains:
“You have a malfunctioning economy, you have a state that
is unable to administer the economy and the country in the best interests of
its citizens, you have widespread poverty, you have business failures across
the board, and you have the productive sector, particularly the manufacturing
industry not doing well.
“You can rename these funds, you can rename these
parastatals, you can rename these financial institutions or anything, but without
addressing the fundamental structural issues in the economy to get the economy
to function, you are getting no way.”
Association for Business in Zimbabwe chief executive
officer Victor Nyoni also said “changing names without necessarily changing
attitude in our view as business sectors particularly for the private sector
point of view, is not an initiative.”
“Government must have minimal involvement in what
businesses do; perhaps it should not be that of regulatory, giving directives
and too much control,” Nyoni said.
“The parastatals should do business in a manner that is
profitable and sustainable for business to thrive in Zimbabwe.
“Particularly most parastatals pay a civil sanctuary to the
manufacturing, and to the industry.
“I think we have to advise the government to step back from
the day-to-day business and make sure that our businesses are acting under the
directives of the economy and not what the government would want to see in
terms of collecting funds.”
He added: “Now as you know there are many other
parastatals, which have been brought into that definition.
“Therefore, what it means is that we have less freedom in
terms of the companies operating freely and deciding on what they should be
doing on a daily basis which is more important.”
Nyoni said it was not too late for government to consult on
the MIF.
“If the parastatals are going to be ignorant in externalizing
funds that worries us as private sector actors. We would want to have
consultation from the government,” he said.
“That means we would then advise the government that it
needs to be done,” he said.
“However, it’s never too late. If the government comes back
to us, we are going to be writing to the government, giving it our thinking
around it.
“Government should concentrate on creating the environment
that is conducive for doing business rather than to be a business actor inside.
“So, it's an issue that we are still trying to engage the
government and once a condition has been taken, we make it public.”
Mnangagwa has in the past been criticised for overlying on
statutory instruments to introduce far reaching measures without involving
Parliament. Standard
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