Finance Minister launches contract for differences on the Victoria Falls Stock Exchange Leonard Ncube

Online Reporter

FINANCE, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube was this morning expected to launch the contract for differences (CFD) on the Victoria Falls Stock Exchange (VFEX).

The launch of CFDs will enable investors to trade them on a regulated platform. This will also increase retail participation and aid financial inclusion.

A CFD is a financial contract that pays the differences in the settlement price between the open and closing trades and is a derivative that allows investors to trade the direction of securities in the short-term.

CFDs can also be used to support low carbon electricity generation projects.

The CFD launch is a culmination of partnership between VFEX, a subsidiary of the Zimbabwe Stock Exchange (ZSE), and the Dubai Gold and Commodities Exchange (DGCX), the region’s leading derivatives exchange.

The two signed a Memorandum of Understanding to strengthen bilateral co-operation, as well as exchange knowledge around commodities trading.

As part of the agreement, the DGCX was expected to extend technical support, knowledge and skills to VFEX with the aim of establishing an international commodities exchange in Zimbabwe.

This comes as foreign companies have expressed interest in listing on the fast-growing VFEX. The CFDs will enhance protection of investors’ money given the background of loss of savings in the past.

This will be buttressed by the launch of the Minerals and Commodities Exchange and welcoming of more listings, with regional and international counters set to join the VFEX ship soon.

VFEX was launched in October 2020 to kick start the Offshore Financial Services Centre (OFSC) that is earmarked for the special economic zone in Victoria Falls.

Government designated the city as an international financial services centre in the last leg of reforms to make the Special Economic Zone attractive to investors.

It is part of efforts to attract global capital and restore foreign investor confidence in Zimbabwe’s capital markets and help companies raise capital in foreign currency.

Located in Matabeleland North, VFEX is the only USD-denominated bourse in the country and region, thereby placing the province at a vantage point to lead in financial technologies investment.

The fast-growing USD-denominated stock exchange has been offering various incentives that include Government’s increase in the retention ratio for exporters listed on the VFEX to 100 percent, which has been an attractive factor for companies.

The platform enables companies in Zimbabwe, the Sadc region and the rest of Africa to raise capital in foreign currency.

All international companies invested in Zimbabwe can seek listings on VFEX as Government has committed that it will remain a foreign exchange market in line with Vision 2030, which requires a lot of foreign investment.

VFEX has 14 counters, including African Sun Limited, Axia Corporation Limited, Bindura Nickel Corporation Limited, Caledonia Mining Corporation, First Capital Bank, Innscor Africa, Karo Mining Holdings, National Foods Limited, Nedbank Group Limited, Padenga Holdings, SeedCo International, Simbisa Brands Limited and Edgars Stores Limited.