Chronicle Editor
Prosper Ndlovu in Dubai, UAE
A US$200 million bond will be launched next month and will be listed on the Victoria Falls Stock Exchange (VFEX) to open wider opportunities for locals and the diaspora community.
Finance and Economic Development Minister, Professor Mthuli Ncube, revealed this here yesterday during a question and answer session with the diaspora community.
President Mnangagwa was the Guest of Honour at the oversubscribed event, which was also attended by Cabinet ministers.
Minister Ncube said the new bond instrument would provide a platform for smart investments with a guarantee for good earnings.
A bond is a fixed income instrument that represents a loan made by an investor to a borrower, usually a government.
Prof Ncube said the diaspora community, which has increased its contribution to the economy to US$1,4 billion in 2021, stands a huge chance to derive higher dividends from the bond market.
He, however, said remittances should be harnessed for strategic economic purposes that will benefit the entire country.
“What we will be doing next month is that we are launching a US$200 million bond and we are targeting the diaspora as investors in that bond,” he said.
“That bond is going to be listed on the Victoria Falls stock Exchange (VFEX), so we are acting on that.”
“We see the diaspora remittances as an opportunity to harness resources and channel these into strategic investments,” said Prof Ncube.
“You see, when you invest money in a fund like a bond, you can simply leave the capital as it is and just transmit your interest earnings to your relatives, but the capital stays where it is so that you send less and less as you go forward.
“But when you don’t invest, it means that you have to always send that US$500 every month to your family.
“But once you invest you can also send part of the money, and it’s a smarter way to send remittances home via an investment and I support that. We will be launching more products like these to harness Diaspora remittances into strategic sections of the economy.”
Prof Ncube said efforts were also under way to establish specific diaspora bonds on the second phase, which will be broader than the initial US$200 million bond.
He also stressed the need to ensure favourable credit rating of the bond instruments to ensure good value for investors.
“One thing that we want to overcome as one of the major issues is credit rating of this bond and we will be working with certain key institutions to guarantee or improve the credit profiling of our bond,” said Prof Ncube.
“So, we will need some global institutions to guarantee this. We are coming in, but I am not at liberty to reveal yet the yield for that bond for now.
“I can assure you the Zimbabwe bond will yield at least seven percent and that’s a healthy-yield for US-dollar bond investments.”
Minister Ncube said over and above the bond market, the VFEX, which has been declared an offshore financial centre and operates within a special economic zone model, presents wider opportunities for all Zimbabweans including the diaspora.
“We wish you could also invest in that area and you will be receiving so many advantages such as investor protection, getting currency protection and absence of volatility because of use of the hard currency,” he said.
“All those are available to you. There will be no difference between you investing in the Dubai Offshore platform or Mauritius or the one in Abu Dhabi, for instance. The features are very similar and you are assured of your returns. So, we look forward to you investing your money in Zimbabwe.”
Online Reporter