AFRICA: Zimbabwe banks on Victoria Falls for new stock exchange.

As published on fin24.com, Monday 4 May, 2020.

Zimbabwe has announced plans to use the allure of Victoria Falls to open a new stock exchange, as part of a broader plan to turn the resort town into an offshore financial centre.

Finance Minister Mthuli Ncube has said the designation of Victoria Falls as an international finance centre (IFC) will provide the industry with additional opportunities to hedge foreign currency denominated products.

This is intended to be along the lines of other offshore centres in Africa, where Mauritius is a standout offshore financial centre. Globally, such centres are found in Ireland, the Caribbean, Luxembourg, Singapore, Hong Kong and the Netherlands.

On Sunday Ncube took to social media site Twitter to announce that Zimbabwe will soon launch the Victoria Falls Stock Exchange (VFEX) that will trade in foreign currency only.

This is aimed at foreign investors and global capital, especially the mining sector, he said.

"As a global securities exchange, VFEX will seek partnerships with other global exchanges and partners around the world, and become a truly global platform.

"Foreign global companies invested in Zimbabwe can now seek a listing on VFEX," said Ncube.

ZSE CEO Justin Bgoni said his office had yet to get the finer details of the minister's announcement, but it was hoping to get approval to operate in a special economic zone (SEZ) where regulations are more relaxed and different from other parts of the country.

"If we are to operate in a special economic zone there are chances of getting tax concessions both for the stock exchange and the issuers.

"It’s also treated like a separate country, so you have more flexibility in terms of movement of money in and out of the country," Bgoni said by telephone from Harare.

He said the repatriation of funds was one of the things the new stock exchange would address.

"If you think of other countries, it's normally good to link an offshore financial services centre with your tourism," he said.

The plans come as foreign investors appear to have lost appetite for the southern African country's capital markets.

This year, foreign investors bought a monthly average of just above US$1 million worth of shares on the Zimbabwe Stock Exchange, down from a monthly average peak of US$26 million in 2013.

Significant changes in exchange rate policy and a failure to repatriate capital gains and dividends have been cited as discouraging factors.