eBusiness Weekly
By Bard Santner Investors
The capital market in Zimbabwe has been undergoing significant transformations in the past two decades. We can pin the beginning of the transformations to the Securities Act (Chapter 24:25) of 2004, and the eventual establishment of Securities and Exchange Commission of Zimbabwe in 2008 which replaced that old incestuous system where market players were, to a very large extent, their own regulators. Things had to change for progress’ sake.
Another major albeit subtle transformation has been the up-skilling of human capital within the market. On this, we are not talking about routine intakes of graduates from local and regional universities but efforts of numerous professionals and organisations in nurturing ours to be a globally competitive capital market regardless of odds against it.
On this, we can mention, as an example, the local chapter of the CFA Institute which has been working with similarly minded under the Investment Professionals Association of Zimbabwe (IPAZ) to mentor university students as they study and aspire to be investment bankers, asset managers, stockbrokers and pension administrators and trustees.
IPAZ has been running research competitions in universities for several years and the winning teams excel each time they cross our borders. In Africa for instance, they come out second (and always second) to the most developed capital market in the continent, South Africa. That speaks volumes about our market and the depth of competencies therein.
The depth is affirmed by, among other things, recent listings of unique asset classes such as Exchange Traded Funds, a Real Estate Investment Trust, and the gathering interest around trading of derivatives instruments.
The skills development initiatives have also filtered down to high schools. Last year, Financial Markets Indaba and Business Weekly in partnership with the Ministry of Primary and Secondary Education launched the Capital Markets High School Quiz with the Securities and Exchange Commission of Zimbabwe being headline sponsor. Twenty schools participated and a whole lot more are expected to participate this year so-spreading knowledge and appreciation of capital markets to households in a very engaging and enduring manner.
We have thus far discussed regulatory transformation and what economists would call sustainable accumulation of human capital stock within the capital market. There are two other significant transformations: the launch of the Victoria Falls Stock Exchange and an International Financial Services Centre. The VFEX is the only stock exchange in Africa trading all securities in USD. This naturally makes all investors, wherever domiciled, curious about this rather unique market on the banks of one of the seven wonders of the world.
Market players are of course aware of the recent listing the Karo Platinum Project Bond on the VFEX. It is the only debt security in the capital market and it attracted material foreign capital, much more than has been seen in decades in terms of portfolio investment inflows. This is a positive signal on the prospects of the capital.
But it is not only foreign capital that our market must target. Domestic capital and that of non-resident Zimbabweans is important because it understands context better than all others. Nowadays, there is a lot of talk across Africa on the ever-increasing Diaspora Remittances. What lacks in the capital markets are structures to harness and transform that capital for long-term investment. Without such formal structures remittances channelled towards long-term investments will remain haphazard and difficult to scale-up.
It is on these foundations, gaps, and prospects that earlier this year Financial Markets Indaba and the Zimbabwe Embassy in the United Kingdom partnered with Bard Santner Markets Inc. to organise a conference in London to showcase our capital markets. It is pleasing to note how stakeholders, local and in the diaspora, have coalesced into a formidable partnership to make the conference such a significant event than imagined at conceptualisation.
In conclusion, it probably is appreciated by all stakeholders that the future of our capital market will be shaped and could shape the emerging AfCFTA era within SADC. Gradually, borders will blur. Gradually, policymakers will pass on the mandate of economic empowerment to commerce while retaining (and bolstering) their supervisory and facilitatory roles. In that world, capital markets will assume a more pronounced position in society.
That is all in the future. In the immediate (i.e., from 12 to 14 April), the Zimbabwe Stock Exchange will be hosting the Association of Stock Exchanges in Africa for a seminar under the theme “Building African Financial Markets”. A week after that, the Zimbabwe Capital Market Conference will kick off in London. It certainly is another eventful year in our capital market.
