eBusiness Weekly
Business Writer
The Victoria Falls Stock Exchange (VFEX) has a solid pipeline of new products expected to be availed during the second half of the year, including a commodities exchange.
This is one of the initiatives to broaden the exchange and the country’s capital markets as a whole and transforming the resort town into an Offshore Financial Services Centre that will boost opportunities for global investment in the country.
“We are looking at introducing a commodities exchange during the second half of 2023, which we are excited about,” said ZSE head of markets, Kudakwashe Mundowozi during a VFEX Diaspora Masterclass.
In 2021, the VFEX signed a memorandum of understanding (MOU) with the Dubai Gold and Commodities Exchange (DGCX).
The MOU provides for the extension of technical support from DGCX to VFEX with the ultimate aim of establishing an international commodities exchange in Zimbabwe.
This was followed up with a workshop to allow key stakeholders to learn from the DGCX experience and exchange ideas on the establishment of a local commodities exchange. Additionally, this was to allow the VFEX to tap into the expertise from DGCX, which has been a leading derivatives exchange in the Middle East and has played a pioneering role in developing the regional market for derivatives trading, clearing and settlement.
Trading of commodities is ranked number three after foreign exchange and bonds, in terms of value traded creating scope for Zimbabwe to further diversify shares trading into commodities and bonds trading.
For VFEX to launch a commodities exchange will lead to increased economic activity through job creation, expansion of the mining sector which is projected to grow into a US$12 billion revenue sector this year.
“Work on this has already started and we should see it through the close of this calendar year,” said Mundowozi.
Experts in the capital markets and mining sector have agreed the exchange has potential to become a game changer in a country endowed with vast mineral resources as it trades in hard currency and therefore a good funding mechanism for the mining sector, which is seen as an enabler for economic growth.
The commodities exchange is just one of the products the exchange has planned for the expansion of the market.
According to Mundowozi, another listing is expected before year end, while an Exchange Traded Fund (ETF), debt instruments and Real Estate Investment Trust (REIT) will also debut on the US dollar denominated exchange.
“We should see these coming through in the second half of the year,” he said.
The US dollar denominated exchange was launched in 2020 to allow companies to raise capital in foreign currency for their expansion projects as well as importation of raw materials and equipment. It was introduced to address some of the glaring challenges that businesses and investors faced on the ZSE, which also deterred investment.
Trading commenced on October 26, 2020 with Seed Co International as the pioneering counter, followed diversified crocodile breeder Padenga the following year. The exchange now has 13 listings.
