The World Bank has raised concerns over Zimbabwe’s financial stability, highlighting risks associated with the country’s state-owned enterprises (SOEs) and the recently established Mutapa Investment Fund (MIF).
By Ryan Chigoche
The fund controls all state-owned enterprises, including key parastatals such as Hwange Colliery Company, the National Oil Infrastructure Company of Zimbabwe, and Petrotrade. In addition to these assets, MIF has fully taken over Kuvimba Mining House, Zimbabwe’s largest mining conglomerate, which owns major assets such as Bindura Nickel Corporation, Freda Rebecca Gold Mine, and Great Dyke Investments.
In its latest report, the World Bank noted that the presence of numerous SOEs under MIF presents a significant fiscal risk. “The presence of many SOEs presents a potentially significant and common source of fiscal risks, with government bailouts of troubled SOEs costing the government of Zimbabwe. A new source of fiscal risks emanates from the recently formed Mutapa Investment Fund. While the MIF was recently established with a view of enhancing the government of Zimbabwe’s agility to deal with SOE assets, its governance framework is underdeveloped and results in a potential overlap with other ministries’ legal oversight over SOEs.”
The World Bank further expressed concern that MIF’s ability to act as a spending authority could undermine the national budget process, exposing the government to risks linked to extrabudgetary entities. This cautionary note arrives at a critical moment as Zimbabwe grapples with inefficiencies that continue to plague its SOEs despite years of promised reforms.
In 2018, the Zimbabwean government launched a broad reform agenda aimed at addressing the challenges within its SOEs. This included measures such as liquidation, partial privatization, regulatory transformations, and structural adjustments under various ministries.
However, the expected improvements have not materialized, and these entities remain burdened by poor governance and financial mismanagement, particularly in critical sectors like mining and energy.
The concerns surrounding MIF’s growing influence have intensified, particularly after the fund acquired the remaining 35% stake in Kuvimba Mining House in February 2024 for US$1.6 billion, a transaction financed through Treasury Bills. This amount, equivalent to 5% of Zimbabwe’s GDP, has raised alarms and questions over the valuations.
Moreover, in November 2024, the Zimbabwean government amended the law to grant MIF the authority to use state assets under its control as collateral to secure loans.
Critics argue that this move significantly enhances the fund’s financial autonomy, enabling it to borrow outside the national budget framework and increasing the risk of fiscal mismanagement. The potential for misuse of state resources, combined with the fund’s already questionable governance framework, raises serious concerns about its long-term financial stability.
As Zimbabwe continues to struggle with inefficiencies in its SOEs, the full acquisition of Kuvimba by MIF and the legal amendments granting it greater financial control highlight the need for greater transparency and accountability. Without these reforms, MIF may become a vehicle for unchecked borrowing and mismanagement, further undermining Zimbabwe’s already fragile economic stability.
