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THE Government has gazetted provisions outlining the operational framework and governance structures for the Victoria Falls International Financial Services Centre (VFIFSC).
The new regulations aim to create a distinct financial hub that is largely independent from Zimbabwe’s conventional commercial laws and courts, unless explicitly stated, to attract foreign capital.
The initiative is envisaged to establish a special economic zone (SEZ) on the Masuwe State land within the resort town.
The provisions, detailed in the recent Government gazette, outlines the scope of services, administrative structures and their respective mandates.
Licensed entities will be authorised to conduct a broad spectrum of financial activities, including banking and other financial businesses, operating in freely convertible multi-currencies and targeting international markets.
The establishment of the VFIFSC governing council is a key part of the new provisions.
The high-level body, to be chaired by the President, will wield significant administrative and policy-making authority in shaping the operational modalities of the financial hub.
Ministers of Finance, Economic Development and Investment Promotion as well as Justice, Legal and Parliamentary Affairs Professor Mthuli Ncube and Justice Mr Ziyambi Ziyambi respectively are also part of the council.
Furthermore, the regulatory framework provides for the inclusion of additional ministers appointed by the President.
The provisions also allow for the incorporation of relevant expertise within the governance council.
However, the appointments will be made after consultations with both the ministers of Finance and Justice.
Overall, the governing council is responsible for determining the strategic direction for the development of the centre.
This crucial responsibility is explicitly linked to the broader national development plans, underscoring the intention to integrate the VFIFSC’s growth with the country’s overall economic objectives.
Technical advisory committee
To further bolster the governance structure, the regulations provide for the establishment of a technical advisory committee comprising representatives from key financial and regulatory bodies.
As a result, the Reserve Bank of Zimbabwe, the Zimbabwe Investment and Development Agency, and the Insurance and Pensions Commission, as well as the Zimbabwe Revenue Authority, the Financial Intelligence Unit, the Securities Exchange Commission of Zimbabwe, the Attorney-General and the Deposit Protection Corporation, are key members.
The committee is also complemented by seven additional experts in finance, law, technology and related fields.
Its core functions are to advise the council and the Government on VFIFSC-related matters, assist in policy formulation and implementation, evaluate the impact of policies and assess the effect of existing and proposed legislation.
It will spearhead the centre’s operations through comprehensive functions.
These include administering the VFIFSC, formulating investor-attracting policies and incentives for financial services development and establishing an efficient operating framework.
It will undertake any functions delegated by the enabling Act and promote public understanding of the financial system.
Furthermore, the committee will ensure collaboration between public and private sector entities in financial services and global business.
Its regulatory duties encompass registering and supervising banks, insurance firms, capital markets, fintech and ancillary services.
Crucially, it will combat financial crime, including fraud and money laundering, by conducting investigations and implementing preventive measures against illicit practices and market abuse.
The committee will serve as a primary adviser to the Government on all VFIFSC-related matters and is empowered to undertake actions conducive to achieving its objectives.
It will also manage dispute resolution through administering arbitral proceedings, facilitating mediation and conciliation, appointing arbitrators and ensuring adherence to arbitration rules, thereby fostering a stable and reliable business environment within the VFIFSC.
International financial hub
The operational effectiveness of the VFIFSC will be underpinned by a set of prescribed powers granted to the administrative body.
The powers are designed to enable the centre to comprehensively discharge its functions.
The authority includes the crucial ability to establish rules relating to standards, inspections, investigations, licensing, dispute resolution mechanisms, directives, penalties for offences and to provide accompanying guidelines.
This empowers the VFIFSC to create its own regulatory framework tailored for the needs of an international financial hub.
Additionally, the centre will have the discretion to grant exemptions or partial exemptions from its rules and guidelines for specific cases or categories, provided there is sufficient justification, allowing for flexibility and consideration of unique circumstances.
The provisions also address the integration of existing market infrastructure.
Specifically, the Victoria Falls Stock Exchange will be automatically deemed licensed as a participant within the VFIFSC from the effective date of these regulations.
This seamless transition aims to leverage existing market expertise and infrastructure within the new financial ecosystem.
The regulatory environment of the VFIFSC will also be influenced by local governance structures.
The provisions state that the by-laws of the Victoria Falls Municipality will apply to the VFIFSC’s designated SEZ, albeit with necessary variations to accommodate the specific operational requirements and international focus of the financial centre.
This ensures a degree of alignment with local regulations while allowing for the unique needs of the centre.
To establish a distinct regulatory landscape for the VFIFSC, the provisions explicitly outline a list of statutes that will not be applicable within its boundaries.
The exemption is subject to Section 78B of the Banking Act and overrides any existing legislation, signalling a clear intent to create a specialised environment conducive to international finance and business operations.
The extensive list of statutes specifically excluded from applying within the VFIFSC includes key pieces of legislation governing various aspects of the Zimbabwean economy and financial system.
These encompass key legislation governing business entities, insurance, pensions, securities, exchange control, income tax, mineral and gold trading, revenue authority operations, asset management, collective investment schemes, national payment systems, the central bank, competition, deposit protection, public procurement, corporate governance of public entities, and value-added tax.
The exclusion highlights the need to create a distinct regulatory environment tailored for the VFIFSC.
However, the provisions unequivocally state that fundamental laws pertaining to national security and financial integrity will remain in full force within the VFIFSC.
Specifically, the Suppression of Foreign and International Terrorism Act and the Money Laundering and Proceeds of Crime Act, along with all other criminal laws of Zimbabwe, will apply without any exception within the designated financial zone.
Online Reporter