It was a unilateral decision by the freshly minted Mugabe regime, who did not know or care about the ICAO process/structure. But in the early 1980's, everyone was so busy fawning over the new boy-wonder and his regime in Zimbabwe that they politely worked around the problem and accomodated them.
Then they pulled the same stunt on the Air Zim flight numbers - just changed them to "AZ" (or something similar). This was the same as someone elses code so it immediately threw the system into chaos, I gather. So then they looked through the remaining spare code combinations and reluctantly accepted "UM" as being as close as they could get.
But maybe someone else has better detail on this? (It almost belongs in "You know you are in Africa..")