𝗗𝗘𝗠𝗬𝗦𝗧𝗜𝗙𝗬𝗜𝗡𝗚 𝗧𝗛𝗘 𝗠𝗨𝗧𝗔𝗣𝗔 𝗜𝗡𝗩𝗘𝗦𝗧𝗠𝗘𝗡𝗧 𝗙𝗨𝗡𝗗.

Logo of the Mutapa investment fund which symbolizes an Munhumutapa era traditional head rest.

What Is The Mutapa Investment Fund?

The Mutapa Investment Fund is the sovereign wealth fund of Zimbabwe, established by The Sovereign Fund Act, Chapter [22.20], as amended. It is the strategic arm of the government, capitalized with the transfer of strategic state-owned enterprises and investments.

What makes the Mutapa Investment Fund 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 the government to play a pivotal role in growing critical sectors of the economy.

This approach mirrors the Ethiopian Investment Holdings, the biggest sovereign wealth fund in Africa at $150 billion with other 30 state owned companies under its management, grew Ethiopian Airlines into the biggest airline in Africa, with a revenue of over $6 billion in revenue 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.

What Is MIF’s Purpose?

The purpose of the Mutapa Sovereign Wealth Fund (Mutapa Investment Fund) is to harness the wealth-generating potential of Zimbabwe's resources, companies, and investments, and to strategically reinvest the proceeds. This maximizes returns and leverages growth opportunities, aiming to make Zimbabwe A middle-income country by 2030.

As of 30 April 2024, the Mutapa Investment Fund took over the shares of the government in several parastatals. With this, MIF began reforming these companies to ensure proper corporate governance and skilled boards, transforming them into centers of excellence, economic dynamos and centers of technological advancement and industrialization, similar to the approach of China's sovereign wealth fund.

What Are Its Objectives?

The objective of the Mutapa Investment Fund 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 and long term.

To drive investment, technology transfer, and industrialization, the fund 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.

What Is The Investment Strategy?

The fund’s investment strategy is a self-sustaining model centered 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 center of the investment strategy is a proven model used by Warren Buffet with Berkshire Hathaway.

By having a diversified insurer like Zimre, Mutapa has a capital generator, with 80-85% of the monthly premiums becoming passive income to fund the business’s revenue generators. Zimre not only provides insurance cash-flow but also brings a portfolio of strategic subsidiaries in the food value chain.

Meanwhile, Kuvimba, which holds Sandawana and GDI, has over $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 Mutapa Investment portfolio. Just one mine in this portfolio has over 700,000 tons of lithium stockpiles above ground, worth $210 million at $300 per ton. Zim Alloys, also part of the portfolio, is not just mining chrome but it’s renovating its smelter to start producing chrome concentrate by August, 2024.

What Is The Corporate Governance Structure Of MIF?

The administration of the fund lies in the hands of an eight-member board of experts in finance, economics, deal structuring, and law, appointed by the President in consultation with the finance minister. The board comprises an equal number of women and men, with a female Chairman 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 exceed $1 trillion, it is now the skill of this team that should steer this endowment to ensure that these reserves turn the Mutapa Investment Fund 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 sixty 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 reinvested 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 Mutapa Investment Fund 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.

Written by Rutendo Matinyarare, Chairman of ZASM.