Victoria Falls bourse adds impetus to robust financial system: Mthuli Ncube

The Chronicle

Oliver Kazunga recently in Victoria Falls
THE establishment of the Victoria Falls Stock Exchange (VFEX) has added impetus to the creation of robust financial systems in Zimbabwe, which is critical as the country drives towards realising an upper middle-income economy by 2030.

Finance and Economic Development Minister Professor Mthuli Ncube said this on Friday while officiating at the listing ceremony of Bindura Nickel Corporation (BNC) on the US dollar-denominated bourse in Victoria Falls.

BNC becomes the fourth entity to list on the VFEX since the operationalisation of the platform in October last year.

Leading seed producer, SeedCo International Limited, was the first company to list on the VFEX in October 2020 while Caledonia Mining Corporation, which owns Blanket Gold Mine in Gwanda, and Padenga Holdings, a crocodile meat and skins processor with interest in gold mining, joined this year.

VFEX seeks to provide a global platform for the trading of stocks in hard currency in a way that promotes foreign investment into Zimbabwe and the entire Sadc region.

The exchange is also one of the many initiatives being implemented by the Second Republic to stabilise the economy and attract foreign direct investment.

“As a country aspiring to reach an upper middle-income status by year 2030, we need robust financial systems that can mobilise both domestic and foreign capital inflow investment in the productive sectors of our economy,” said Prof Ncube.

He said the signing of the Memorandum of Understanding between VFEX and Dubai Gold and Commodities Exchange (DGCX) in October would go a long way in facilitating cooperation and knowledge exchange around commodities’ trading on an exchange.

“Our financial markets need to embrace commodities trading… a transparent market for commodities will assist our producers to get market-determined prices for their output,” said Prof Ncube.

“It’s our hope that VFEX will pursue this initiative with the ultimate aim of establishing locally-based exchange for hard commodities (natural resources that are mined).”

The minister said the development of sound financial markets was critical for the economy and establishment of sustainable business models.

He noted that a number of unlisted businesses have in the past folded because of the key-man risk (where the founder becomes incapacitated or passes on leaving no-one confident enough to keep the business going) and, thus, such risks are minimised on the stock exchange through the separation of management and ownership.

In this context, Prof Ncube said it was high time that entrepreneurs move away from a model of total control to a model that promotes growth of the company and the economy at large.

“As we celebrate the listing of BNC on VFEX today, we need to remind each other that the mining sector remains pivotal to our country in terms of foreign currency generation and employment creation,” he said.

“This is why in 2019, President Emmerson Mnangagwa launched the US$12 billion mining industry by 2023. We are, therefore, hoping that BNC goes on to fully utilise the capital raising opportunities on VFEX so as to increase production.”

Guided by the five-year economic blue-print, the National Development Strategy 1 (NDS1), which runs from 2021-2025, Prof Ncube said all stakeholders have a part to play in the success of Zimbabwe.

“Whilst the Government will continue to work on fostering business-friendly environment, this should be complemented by increased productivity and investment. Let us shun corruption, rent-seeking behaviour that will fuel inflation and currency instability,” said Prof Ncube.

Under NDS1, the Government targets a single-digit inflation and a stable currency.

According to Zimstat, Zimbabwe’s year-on-year inflation rate, the year-on-year inflation rate for the month of November 2021, as measured by the all-items Consumer Price Index, stood at 58,4 percent.

Government has revised upwards the year-end inflation target to between 52 and 58 percent citing recent inflationary pressures.

Earlier this year, Prof Ncube had predicted that inflation would close the year at between 25 and 35 percent following a rapid decline of the inflation rate this year to hit a two-year low of 50,2 percent in August.

The 25-35 percent range projection was a revised target of the initial forecast authorities had made in the year that inflation would fall below 10 percent by December this year.

The minister expressed concern that the economy was faced with yet another wave of the Covid-19 pandemic that is threatening to derail tourism and the entire economy.

“We encourage those who are not vaccinated to get vaccinated. Government has procured enough vaccines to cover all Zimbabweans who want to be vaccinated,” he said.

In her remarks VFEX chairperson, Mrs Caroline Sandura, said BNC listing was a remarkable achievement for the bourse and the capital markets at large.

“For those wondering why there has been a great trek to the VFEX this year. Let me remind you of the benefits and incentives for entities that list on VFEX, which include but not limited to the following: the ability to raise capital in hard currency; the incremental export retention; international branding and VFEX will ultimately seat in the offshore financial services centre and this will have significant visibility effect and lower trade fees for investors,” she said.

Mrs Sandura said VFEX would play its role of facilitating capital raising and providing an active secondary market for BNC shareholders. Meanwhile, BNC has indicated that it has ambitious capital programme it intends to fund using resources from the VFEX.

This includes the US$200 million Hunters Road project, which has remained at pre-development stage for more than 10 years, as well as shaft re-deepening at Trojan Mine and the removal of Shangani Mine from care and [email protected]

Article Source: The Chronicle

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