Several entities under the Mutapa Investment Fund require improved corporate governance, including greater board member diversity and more transparent decision-making processes, chief executive officer (CEO) Dr John Mangudya said.
These are some of the findings from diagnostic assessments conducted by the sovereign wealth fund to identify areas requiring improvement as it strives to enhance the profitability of its entities.
Governance deficiencies within State-owned entities have frequently been highlighted in reports by the Auditor-General’s Office.
The Mutapa Sovereign Wealth Fund is a strategic investment arm of the Government capitalized through the transfer of selected State-owned enterprises and various Government investments. Its purpose is to preserve and grow wealth for citizens from investments under the fund’s portfolio.
“We also identified opportunities for consolidation and clustering of similar entities to improve efficiency, reduce costs and duplication,” said Dr Mangudya in the inaugural newsletter produced by Mutapa.
“We see potential for consolidation and clustering of entities in order to realize maximum benefits from entities under the fund.”
Violations of the basic tenets of corporate governance, such as transparency, accountability, fairness and independence, have created fertile ground for corruption and the misappropriation of public funds.
The violations often manifest in the form of conflicts of interest, nepotism, bribery and the abuse of power, resulting in the diversion of public resources for personal gain.
The OAGs latest audit highlights a concerning pattern of non-compliance and governance shortcomings across various public entities.
The report delves into critical areas like revenue collection, debt recovery, asset management, investments, procurement, human resources and service delivery.
The audit has uncovered a significant increase in reported governance issues, jumping from 170 to a staggering 310compared to the previous report.
The findings highlight a pattern of weak internal controls across various public entities, evidenced by issues like unsupported expenditure, accounting misalignment, outdated accounting practices, non-tax compliance, unreconcilled bank accounts and lack of internal audits.
It details alarming trends in revenue collection and debt recovery and identifies revenue leakages, long-outstanding debts, and delays in receipting deposits.
These issues have resulted in a net liability position for some entities, threatening their ability to deliver essential services.
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On the consolidation of entities, Mutapa has successfully clustered 62 entities, including subsidiaries and state-invested enterprises, into six key strategic sectors to optimise benefits.
The strategic restructuring aims to streamline management and drive growth across the portfolio. By grouping similar entities,the fund can identify areas of improvement, streamlining strategies, and allocate capital more efficiently.
Regarding how ordinary Zimbabweans would benefit from the fund, Dr Mangudya explained that when the entities become commercially viable and profitable, they would reduce their dependence on Government support, freeing up resources for other priorities.
Secondly, increased production will lead to more employment opportunities and a more stable and resilient economy.
Third, Mutapa will contribute to achieving the objectives of the National Development Strategy and the aspirations of Vision 2030 by increasing Gross Domestic Product (GDP) and per capita income.
“Resultantly, the fund is expected to increase generational wealth to enhance the welfare of Zimbabweans,” he said.
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