Stock Exchange, a key to unlock co-financing

Leonard Ncube, Victoria Falls Reporter

GOVERNMENT has encouraged stock exchanges to play a leading role in leveraging co-financing through public-private partnerships in order to attract more private sector financing for infrastructure development.

The call was made at the ongoing Committee of SADC Stock Exchanges (CoSSE) Bi-Annual meeting and the African Securities Exchanges Association (ASEA) BAFM here in Victoria Falls yesterday.

Stock exchange experts from over 30 countries are attending the two events that started on Monday hosted by the Zimbabwe Stock Exchange.

Ministry of Finance and Economic Development non-accounting Permanent Secretary Dr Judith Kateera who was guest of honour at the opening ceremony on behalf of Professor Mthuli Ncube (Finance Minister) said Government is committed to establishing robust and stable capital market platforms in line with the 5-year Medium Term Plan as well as the country’s Vision 2030.

“As Government, we are encouraging stock exchanges to play a major and an increased role in leveraging co-financing through public-private partnerships in order to attract more private sector financing for project preparation and infrastructure development.

“It is understood that in Zimbabwe, and indeed, in the continent, there is a huge deficit of well-prepared, commercially viable or bankable projects. The active and increased role of stock exchanges in resource mobilisation for infrastructure development will help close the regional infrastructure financing gap that currently exists in the country and in the continent.

“We encourage you to be innovative in regard to long-term infrastructure financing, supporting for instance, issuance of various financial instruments such as catastrophic bonds, green bonds, infrastructure bonds, diaspora bonds, SME Infrastructure bonds and government will endeavour to do the necessary to complement private sector efforts,” said Dr Kateera.

The conference aims to bring together relevant capital markets stakeholders, academics, policymakers and investors, to discuss the risk components presented by emerging global trends, with a focus on both systematic and unsystematic risk.

Dr Kateera said the theme: “Managing risk in turbulent times” resonates with the need to re-invent and redesign processes, how to adapt to emerging trends that can help investments thrive in the new normal brought about by the Covid-19 pandemic and the war in Ukraine.

She said there is a need to share ideas on how to mitigate some of the risks in the capital markets.

Dr Kateera said some of the risks faced by capital markets in most countries include debt distress and arrears, interest rate risks, weak internal and expenditure controls,

Risks in the banking and non-banking sectors of the economy, inclusive of interest rate risks, manipulation, market manipulation, regulatory risk, operational risk, climate change risk; reforms implementation, food shortages arising from the Russian-Ukraine conflict, cyber security and technological risks among others

The conference seeks to identify and proffer solutions to come of the risks.

The events come as the International Monitory Fund launched the April 2023 World Economic Outlook and the Global Financial Stability Report where it is indicated that the global economy is and will continue to be facing several risks.

African countries, therefore, need to be proactive to avert some of the risks and meet some targets set by Sustainable Development Goals towards the Africa we want.

“We need to avert this by being proactive. We need to face the risks head-on and agree on risk mitigation measures so that we can move hand in glove in a public–private partnership manner.

“As Government, we further encourage investment in technologically advanced and resilient infrastructure in this post-pandemic period, hence the need for long-term regional and national resource mobilisation strategies to fund development in the country and in the continent. As a Government, are actually speaking loudly about the increased role of stock exchanges and the entire capital market in Zimbabwe and in the continent,” she reiterated.

Dr Kateera said financial technology had brought its own share of risks that need mitigation.

This comes as the Securities and Exchange Commission (SECZ) has submitted proposals for the amendment of the Securities and Exchange Act [Chapter 24:25] to align legislation with international best practice, enhance investor protection, promote market integrity and build investor confidence through ensuring fair, efficient and transparent markets.

Participants at the meeting concurred that the current market volatility demands a rigorous approach to information collection and interpretation. – @ncubeleon