PREVIEW
Claims that the Mutapa Investment Fund paid US$1.6bn to presidential ally Tagwirei highlight risks of grand corruption
Shortly after his victory in last year’s disputed elections, President Emmerson Mnangagwa reconstituted the country’s Sovereign Wealth Fund, bringing 66 state-owned enterprises (SOEs) under the control of his office and Finance Minister Mthuli Ncube. Parliament’s Public Accounts Committee has been barred from any oversight role or access to information about the fund and the fund’s employees are sworn to secrecy.
Known as the Mutapa Investment Fund, it has a 10-member board, each of whom was appointed by the president, with no requirement for wider consultation. All reports and financial documents from the MIF are kept out of public scrutiny, with access restricted to Ncube and Mnangagwa. It has emerged that Mnangagwa and his business partner, Kudakwashe Tagwirei, both under United States sanctions for grand corruption, have been central to the design and construction of the MIF and its obsessively secretive operations (AC Vol 65 No 9, Washington targets Mnangagwa for rights abuses and corruption but sends mixed messages).
There is no clearly defined process for adding or removing companies from the MIF, and it appears to be done at the president’s discretion. Statutory Instrument (SI) 156 specifies that members, employees and agents of the MIF are prohibited from disclosing information about operations to the public (in spite of the fact that the companies under the Mutapa Fund are parastatals with direct impact on citizens’ daily lives, such as the electricity provider, the Zimbabwe Electricity Supply Authority). The MIF is also exempt from Zimbabwe’s exchange control regulations, and has access to unlimited externalisation or import of foreign currency (AC Vol 64 No 21, Mnangagwa presses on regardless).
The lack of transparency and accountability within the MIF is causing concern locally but may also deter international aid and investment. After the IMF’s recent visit, the staff team included a note on the Mutapa Fund, recommending that ‘strengthened governance framework for the newly-constituted MIF will be key for the stabilisation effort’. This includes clarifying the mandate, ‘enhancing its transparency and ensuring full integration in the budget process’ (with details on what this should look like), and adhering to corporate accountability standards (AC Vol 65 No 15, Against the odds, can the new ZiG currency tame inflation?).
That would mean opening up the fund’s operations to parliamentary scrutiny – something that Ncube and Mnangagwa are set against. The lack of transparency over the MIF – and its unfettered access to US dollars – reinforces popular scepticism about the government’s proclaimed economic goals of driving economic growth and stabilising a new national currency, Zimbabwe Gold (ZiG).
So far, 66 SOEs and parastatals have been put under the MIF’s management. This includes companies from across the economy, from transport entities like the National Railways of Zimbabwe, Air Zimbabwe and the Zimbabwe United Passenger Company (ZUPCO), to agriculture parastatals like the Cotton Company (CottCo) and the Agricultural and Rural Development Authority (ARDA), to energy and mining companies. There are a number of mines and mining management parastatals, including Fidelity Gold Refinery, which has a monopoly on purchasing all gold mined in the country.
According to MIF’s Deputy Chief Investment Officer, Ernest Denhere, the fund plans to prioritise infrastructure, mining and energy SOEs for ‘quick wins’ towards the Mnangagwa government’s ‘Vision 2030’ – their plan to transform the country into a ‘prosperous and empowered upper middle-income society by 2030’.
One of the mining companies brought under the MIF is Kuvimba Mining House, the company that acquired some of Zimbabwe’s most valuable mining assets through Tagwirei (AC Vol 65 No 9, Washington targets Mnangagwa for rights abuses and corruption but sends mixed messages)
In 2019, Tagwirei’s firms Sotic International and Landela purchased 85% of Freda Rebecca gold mine, the Shamva gold mine, 75% of Bindura Nickel, 60% of Zimbabwe Alloys (chrome) and then another 25% through another Tagwirei firm, 50% of Great Dyke Investments (platinum) and then the rest of the shares when the Russian joint venture partner pulled out.
Four Zimbabwe Mining Development Corporation mines, Sandawana, Elvington, Jena and Golden Kopje, which produced a variety of minerals (including gold, emeralds, nickel, and most recently, lithium), were obtained by Tagwirei’s companies through a payment of 150 million Zimbabwean dollars (about US$14m) to clear their debts. These mines were all transferred to Kuvimba Mining House in 2020. Kuvimba then took on a number of dormant gold mines and cut a deal with state-owned Zimbabwe Iron and Steel Company to sell iron ore found on Kuvimba properties.
When the Kuvimba Mining House was established in 2020, 65% of its shares were owned by the state, while the other 35% were held by private investors – specifically Pfimbi Resources, a Mauritius-based entity which is controlled by Tagwirei. The 65% of state shares of Kuvimba were brought under the MIF in the initial presidential SI of 2023.
In February 2024, there were reports that the MIF had bought out the remaining 35% of Kuvimba shares. Then in April, local investigative journalism group, NewsHawks, reported that the 35% of private Kuvimba shares had indeed been purchased by Mutapa Fund, for a staggering US$1.6 billion, paid out in Treasury Bills.
In a report on the purchase, analysts at The Sentry, a US-based investigative group, pointed out that US$1.6bn for 35% of the shares of Kuvimba would imply that the overall value of the company is US$4.6bn. Based on claims made by Finance Minister Ncube in 2021 about using Kuvimba shares to compensate former farm owners and in 2022 about using Kuvimba shares to compensate pensioners who lost savings during currency reform, The Sentry calculated that the government had valued Kuvimba at US$2bn in 2021 and just US$1.5bn in 2022.
According to The Sentry, Kuvimba’s gold mines could be earning as much as US$250m a year, but the platinum and nickel projects are mostly inactive or operating at a loss, and lithium prices have declined. The price was vastly inflated and added a sizeable chunk to Zimbabwe’s already-unmanageable debt.
Between the Kuvimba US$1.6bn Treasury Bills, other Treasury Bills intended to ‘recapitalise’ the Mutapa Fund, and US$900m allocated to the Reserve Bank of Zimbabwe, the country’s debt increased by US$3bn this year, to US$21bn. It was that ballooning of national liabilities through opaque transactions that reinforced the IMF’s downbeat prognosis for Zimbabwe’s economy and its warnings about the lack of transparency in the MIF’s operations.
How MIF took over MDC headquarters
The offices of the Mutapa Investment Fund are at 49 Kew Drive, a residential address in the upmarket Highlands suburb. Ironically, this house was previously known because it was the residence of the founding president of the Movement for Democratic Change, Morgan Tsvangirai. It was purchased by the state during the Government of National Unity period (2009-2013), as the official residence of the Prime Minister.
Tsvangirai stayed on in the house after the GNU, and it became a de facto headquarters for Tsvangirai’s faction of the opposition during the turbulent period between the 2013 election and the 2017 coup, but the question of ownership was not resolved. When Tsvangirai was ill, in early 2018, President Emmerson Mnangagwa offered to give him the house (AC Vol 59 No 4, After Tsvangirai). However, after Tsvangirai died, Mnangagwa wrote to Elizabeth, Tsvangirai’s widow, offering to sell it to her for US$1.8 million, payable over 60 months (AC Vol 53 No 19, Morganatic marriages).
Local papers report that the price was negotiated down to $1.5m. Elizabeth Tsvangirai – daughter of Joseph Macheka, a politburo member of the ruling Zimbabwe African National Union – Patriotic Front (ZANU-PF) – kept the house, which was advertised for rental on the website for her real estate business, Royal Properties and Construction. The paint grew shabby and the plants at the gate looked under-watered.
In 2023, images appeared on social media of members of the ZANU-PF Economic Empowerment Group, wearing party scarves with fists raised, at the house on Kew Drive, where they were staying for a conference. Now the walls have been repainted gunmetal grey and there is a large blue Mutapa Investment Fund sign over the electric gate. It seems the property where activists and politicians used to meet with the founder of Zimbabwe’s opposition movement will have a new role as the head office for the ruling party’s top financiers.
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