Business Reporter
MARKET watchers believe the recent directive by the government allowing the Mutapa Investment Fund (MIF) to use its assets for borrowing purposes will go a long way to spur swift turnaround of defunct State Owned Enterprises (SOEs) while improving the Fund’s efficiency.
The latest developments were necessitated after the government changed the law recently to allow the country’s sovereign wealth fund, Mutapa, to use the State assets it controls as collateral to borrow money.
The changes, gazetted last week were 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The gazetted amended law says: “Section 22 of the Sovereign Wealth Fund Act [Chapter 22:20] (No.7 of 2014), is repealed.”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.”
The government has since exempted the MIF from the Public Procurement and Disposal of Public Assets Act to expeditiously necessitate quick recovery of struggling entities under the Fund.
A highly placed financial expert who preferred anonymity hailed the government’s commitment testified by removal of barriers ahead of the MIF.
“The latest move of allowing the MIF to use its assets in borrowing serves a number of advantages. Firstly, it will not drain the fiscus of additional resources to support the Fund’s activities and this means that the country’s debt situation will not be further strained.
“The SOEs must be responsible for their debts so borrowing directly will lay the burden for hardwork on the Fund.It will also go a long way in raising capital to revamp the entities under the MIF,” the source said.
