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.

In February last 2019, authorities announced that all shares
trading in United States dollars would from that point be valued in local
Zimbabwe dollars at a 1:1 exchange rate.

This resulted in huge losses for equity investors.

 

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