Massive interest in Vic Falls Stock Exchange

There has been massive interest by firms willing to register as licensed service providers to participate on the Victoria Falls Stock Exchange (VFEX) only days after the Zimbabwe Stock Exchange (ZSE), which will administer the bourse, invited expressions of interest.

The ZSE said a total of 80 firms interested in offering a cross section of services had responded to its recent invitation for expressions of interest to register as participants when the VFEX finally becomes operational in the resort town.

Among those that have expressed interest are 38 sponsors, 18 securities dealers, 15 investment management firms, six securities custodians and three securities transfer firms.

“The VFEX will be holding virtual meetings with the stakeholders that expressed interest to provide them with detailed information on the VFEX project,” said ZSE chief executive Justin Bgoni.

The VFEX, a wholly owned subsidiary of the ZSE, is currently awaiting licensing by the Securities and Exchange Commission of Zimbabwe (SECZ), which is the national regulator of all securities trading activities in the country.

This comes after the Government recently gazetted regulations that provide the legal basis for establishment and operation of the VFEX, which will allow investors to trade in forex.

Government has long held plans to transform the resort town of Victoria Falls into international financial centre (IFC), as it bids to create favourable conditions that promote the inflow of foreign capital.

IFCs tend to be located in countries that have high education and literacy rates with predictable legal systems that are largely neutral.

In addition to this, they are known for allowing the free flow of capital in and out of the territory.

This is something that Zimbabwe has struggled with over the years and especially in recent times. The new administration of President Mnangagwa has declared Zimbabwe open for business and is undertaking reforms to attract foreign private capital.

Finance Minister and Economic Development Minister Mthuli Ncube, said the global securities exchange, VFEX, will seek partnerships with other global exchanges and partners around the world to become a truly global platform.

Statutory Instrument (SI) 196 of 2020, Exchange Control (Special Provisions for Securities Listed on Victoria Falls Stock Exchange) Regulations, 2020, is the legal instrument that provides for the establishment of VFEX.

Securities listed on the Victoria Falls Stock Exchange shall be tradable and settled solely in US dollars or alternatively any other convertible currency.

A company resident in Zimbabwe or listed on the Zimbabwe Stock Exchange, may list on VFEX not more than 20 percent of its capital at any time on the Zimbabwe Stock Exchange.

Similarly, a company that is a Zimbabwean resident, but not listed on ZSE can list on VFEX if the capital raised by the company on the exchange is from an offshore source or from free funds.

Additionally, such entity may be required to reinvest at least 20 percent of the capital in Zimbabwe no later than five years from the date the date such funds are raised.

Further, it provided that any capital raised on the planned securities exchange is obtained from an offshore source or from free funds, a company that is not resident in Zimbabwe may list on the VFEX.

Non-resident companies may list on VFEX if they delisted from the ZSE five years preceding their listing on the planned exchange and if they will reinvest or employ in Zimbabwe 20 percent of the capital raised on VFEX no later than five years from the date the capital was raised.

Zimbabwe has suffered from foreign-currency shortages for years, which have hammered its economy. Gross domestic product contracted 8,3 percent last year and will slump another 7,4 percent in 2020, according to the International Monetary Fund.

The flow of FDI through the VFEX, which will diffuse some of the perceived risk in the mainland stock market, may help drive the process of rebuilding the battered economy, which has suffered a combination of poor policies in the past and the devastating impact of western sanctions.–

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