GOVERNMENT has pledged to create an attractive environment for investors to participate in Zimbabwe’s capital markets.
This comes as the Zimbabwe Stock Exchange and Victoria Falls Stock Exchange have a combined value of US$4,5 billion, of which US$3,23 billion is for the former and US$1,29 billion for the latter.
Despite this, the volatile currency environment has kept these two bourses from reaching their full potential, often resulting in them being under- or overvalued, leading to investors abandoning the markets.
Speaking at the Chengetedzai Depository Company (CDC) Limited’s Securities Lending and Borrowing (SLB) Conference in Harare yesterday, Finance, Economic Development and Investment Promotion ministry financial sector policy senior economist Elvis Daswa pledged government support.
Alpha Media Holdings (AMH) chairman and owner, Trevor Ncube, moderated the conference.
AMH are publishers of NewsDay, The Standard and Zimbabwe Independent and own online broadcaster Heart & Soul TV.
“The government continues to provide all the necessary support for an enabling environment on the capital markets and we are glad to note that key market infrastructures like Chengetedzai are going out of their way to make our markets more attractive to both local and international investors through such initiatives,” Daswa said.
“The government is cognisant of the pivotal role played by capital markets in advancing the country’s economic development goals, through offering long-term capital, mobilising savings and enabling the public to access diversified and secure investment opportunities, among others.
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“Government and its various arms and commissions continue to nurture and provide an enabling environment to all key sectors of the economy, key among them the capital markets, hence our presence at this occasion.”
CDC is a limited liability company incorporated in terms of the laws of Zimbabwe and was formed to establish and operate a central securities depository for the southern African nation’s securities industry.
Daswa said government was hopeful that sooner, rather than later, Zimbabwe’s capital markets would be competitive on the global market.
CDC board member Joshua Chimhanda urged players in the industry to step up against challenges in the market.
“The Zimbabwean financial landscape has undergone immense transformation and this has been driven by many factors; evolving regulatory frameworks, continued shifts in investor expectations and needs and technological advancement, to mention just a few,” he said.
“As active stakeholders within the capital markets, the call is for us to step up to the challenge and move ahead of the tide in growing our markets.”
He encouraged players to take every step necessary to achieve the desired levels of market depth.
“Deepening our capital markets is no small feat and cannot be achieved in one giant leap. It is through small but consistent steps that we can achieve the desired levels of market depth that are comparable to our counterparts in advanced markets,” Chimhanda added.
“Securities lending and borrowing provides one such step for our market as it ensures that investors are aware of the options and opportunities which are potentially open to them within the capital markets.”
SLB is a practice where one party, the lender, temporarily transfers ownership of securities (like stocks or bonds) to another party, the borrower. In return, the borrower provides collateral, usually in the form of cash or other securities and pays a fee to the lender.
CDC shareholder Campbell Musiwa said they were confident that the depository would achieve a world-class AAA rating.
“We are particularly encouraged that this SLB conference coincided with the start of the Chengetedzai 10th year anniversary celebrations and to us, it’s no surprise at all as we have confidence in the world-class AAA-rated system that Chengetedzai operates in a transparent, safe and efficient manner,” he said.
“We believe that the SLB at the time when it’s fully conceptualised and offered to the market will enable the deepening and enrichment of our capital markets riding on the Chengetedzai platform.
“This will ultimately add to the already available basket of capital market products to make our markets more attractive to both local and foreign investors.”
