The government has changed the law to allow the country’s sovereign wealth fund, Mutapa, to use the State assets it controls as collateral to borrow money.
The changes, gazetted Friday, have been made through amendments to the Administration of Estates Act and the Sovereign Wealth Fund of Zimbabwe. The gazetted amended law says: “Section 22 of the Sovereign Wealth Fund Act [Chapter 22:20] (No.7 of 2014), is repealed.”
Section 22 of the Sovereign Wealth Fund Act previously barred government from using the fund’s assets as collateral for loans. That law said: “The assets of the Fund shall not be used— to provide credit to the Government, public enterprises, private sector entities or any other persons or entities; or as collateral for debts, guarantees, commitments or other liabilities of any other person or entity, whether public or private. Any contract, agreement or arrangement, to the extent that it purports to encumber the assets referred to in subsection (1), whether by way of guarantee, security, mortgage or any other form of encumbrance, is null and void.”
After the repeal, Mutapa can now borrow money using its assets.
Last year, a government gazette controversially exempted Mutapa from the Public Procurement and Disposal of Public Assets Act, which compels public enterprises to go through the Procurement Regulatory Authority of Zimbabwe to pay for goods and services. This, officials said, was meant to help Mutapa make investment decisions quicker.
In October, Mutapa CEO John Mangudya claimed Mutapa had completed a “comprehensive diagnostic assessment” of its portfolio, and that this valued its vast assets at US$16 billion. No details have been given on the valuation, which Mangudya said was done by “reputable accounting firms”.
Mutapa holds state-owned interests spanning mining, agriculture, ICT, transport, banks, real estate, energy and trading. Companies under Mutapa include the National Railways of Zimbabwe, Air Zimbabwe, TelOne, Cottco and Defold Mine – which now holds mining assets that were once under the Zimbabwe Mining Development Corporation. Mutapa also controls the National Oil Company of Zimbabwe, Petrotrade, POSB, ZESA, and Fidelity, the country’s sole gold refinery, the Zimbabwe Power Company, PowerTel, Allied Timbers, Telecel and Hwange Colliery.
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