By Nomalanga Moyo
SW Radio Africa
24 March 2014
As Zimbabwe forges ahead towards creating a Sovereign Wealth Fund, observers fear the ZANU PF government is not ready for such an undertaking given its history of economic mismanagement.
Ideally the fund is supposed to be created through pooling together profits from the exploitation of non-renewable resources, such as minerals, into a savings pot for use by future generations.
The idea is to harness excess wealth from depleting resources so that it can be enjoyed by future generations.
According to ex-Finance Minister Tendai Biti, one of the people who proposed setting up the fund while serving in the unity government, the devil is in the detail.
“The fund is created by harnessing profits from these resources and Zimbabwe is not generating any excess at the moment,” Biti told SW Radio Africa Monday.
“The government cannot be thinking of creating a sovereign wealth fund when it cannot even pay workers or cover its recurrent expenditure.
“This is a decent idea which is being implemented at the wrong time. What the government should be doing first is to get the economy working and creating the right conditions for any surplus to be produced.
“Forging ahead with the fund at this time will do more harm than good as it will be another vehicle of ZANU PF’s system of patronage,” the former minister added.
The sovereign wealth fund is currently at Bill stage and, once passed into law, will “support fiscal or macroeconomic stabilisation of the government, including its long-term economic and social development objectives.”
The fund is also expected to supplement the country’s revenues “when these are prejudiced by fluctuations of prices of minerals.”
Norwegian Ambassador to Zimbabwe Bard Hopland however said “the fund should be understood as an instrument for saving and not a development or investment vehicle, but the establishment of mechanisms to set it up should never be tied to the needs of today.”
“However, it is important that you have begun to talk about it. It is good that you realise that you need to save for future generations because these resources will not be there forever,” a Zimbabwe Mail Monday report quoted the envoy as saying.
The ambassador was skeptical of the country’s indigenisation policy through which the ZANU PF government hopes to control the country’s resources.
“We are of the opinion that Zimbabwe is going about the indigenisation agenda the difficult way. We allowed oil companies to flourish but took control of the profits. Zimbabwe wants to control the companies and I think it is not an easy thing,” Hopland added.
Norway boasts the world’s largest sovereign wealth fund, with savings running into almost a trillion dollars.
Zimbabwe has vast mineral resources but continues to struggle to realise value from these because of inherent corruption, plunder and economic mismanagement by the ZANU PF government.
Independent economist Vince Musewe told SW Radio Africa that the Sovereign Wealth Fund will just be another opportunity for ZANU PF to plunder the proceeds from the country’s vast wealth.
“There is no transparent mining sector or economic regime in the country for the fund to be successfully implemented,” Musewe added.