Limitless possibility as Zim launches Victoria Falls Stock Exchange
Prosper Ndlovu/Leonard Ncube, Business Reporters
ZIMBABWE officially launches the Victoria Falls Stock Exchange (VFEX) today as it peeps through limitless possibility in its quest to harness offshore investments, which are critical in bringing about meaningful economic transformation.
The establishment of VFEX, a wholly-owned subsidiary of the Zimbabwe Stock Exchange (ZSE), which will trade exclusively in foreign currency in the resort town of Victoria Falls, is strategic and buttresses the country’s desire to attain middle-income economic status by 2030.
Australian mining company, Arcadia Resources, Blanket Mine parent firm Caledonia, SeedCo International Limited, and a total of about 80 companies have already shown interest to list on the VFEX. This represents a step in the right direction for the new platform. Government also expressed a desire to raise funds for compensating former white commercial farmers through issuing bonds worth a total of US$3,5 billion that will be sold on the VFEX.
As the country’s prime destination and home to one of the Seven Wonders of the World, the allure of Victoria Falls is expected to greatly aid the attraction of global capital, particularly aimed at raising funds for the mining sector, one of the mainstays of the economy.
Finance and Economic Development Minister Professor Mthuli Ncube will lead today’s official proceedings, which mark the commencement of operations on the new bourse with official trading of shares set for Monday. According to ZSE, already 17 securities firms and 13 sponsors have registered to participate on the platform.
Government, through the Securities Exchange Commission of Zimbabwe (SECZ), has already given green light for operationalisation of VFEX including assigning modalities outlining its operations and a statutory instrument governing its activities. The Reserve Bank of Zimbabwe has also signed a Memorandum of Understanding with VFEX guaranteeing smooth trade settlement with investors, thereby dispelling perceived risk associated with the repatriation of funds.
Potential investors and economic analysts have lauded the idea of VFEX amidst the need to attract more foreign capital to the economy, which the ZSE is not specifically designed to do. Prof Ncube has said the broader vision was to locate VFEX as a Pan-African gateway for offshore investments for the rest of Africa.
With the Victoria Falls falling under a Special Economic Zone, Government has dangled special incentives for new traders, which will encourage business and growth opportunities for the VFEX.
“The aim of the (this) stock exchange is to provide a platform, which allows easier repatriation of funds with respect to foreign capital thereby solving the challenges with the traditional Zimbabwe Stock Exchange where investors were struggling to repatriate their investments to their parent countries,” political economy analyst, Mr. Kevin Tutani, said.
“The possibilities are limitless. How can the new stock market be utilised for maximum results? Good management of this second stock market, after the ZSE, will likely bring results of a successful new enterprise, job creation, and a burgeoning economy. Are we on the cusp of a new era in Zimbabwean financial markets?”
VFEX operationalisation has also excited the tourism industry given the wider implications in terms of attracting more tourists and businesses to set-up shop in the resort town. Tour operators say VFEX is one of the first visible fruits of the Victoria Falls Special Economic Zone, which has created opportunities for expansion of the resort town.
Hospitality Association of Zimbabwe (HAZ) chairman for Victoria Falls chapter, Mr. Anand Musonza, expressed the sentiment for the sector.
“We are excited about new investors that will be coming into town. We believe the VFEX will attract new investments into the country and our town, in particular, to allow new businesses to set shop and create new offerings for the hospitality industry,” he said.
“This will create job opportunities for our people and contribute to the growth of our industry and town.”
Mr. Musonza said Victoria Falls town was hard hit by Covid-19 as its economy was solely dependent on tourism, which was grounded by the pandemic due to international travel bans.
Industrialist and United Refineries Limited chief executive officer, Mr. Busisa Moyo, said VFEX launch will torch a scrabble for land development in the resort town and its surroundings.
“To my local friends and my diaspora kith and kin, the early bird catches the worm. Also buy land near Victoria Falls, Hwange, Binga, and thank me later. This comes once every 100 years,” he posted on his Twitter handle.
As VFEX forges ahead, experts have urged administrative and marketing excellence, which will largely determine the success or failure of the platform. They said the new stock exchange should make it cheaper and more efficient for investors to trade and that fees charged and time taken to settle transactions should be as low and as efficient as possible. The technology used for operations must also provide for security, speed, and transparency in the settling of transactions.
“The nature of global capital should be understood and also its market segments if any so that marketing messages are effective and yield fruitful results for the stock market,” added Mr. Tutani.
“All possible revenue streams should be utilised and exploited accordingly from the equity market, risk management, post-trade services, and provision of data. Since the VFEX will be a market for attracting global capital it must be globally competitive. Ambitious yet achievable goals must be set.
“The VFEX may even aim to be a gateway for investors to access the Southern African region or even the African continent at large. There is no room for complacency. Regulatory authorities must responsibly oversee activities of companies on the VFEX and give regulatory guidance as and when required.”