Vusumuzi Dube
Vuyisile Mlilo , Business Reporter
THE United States (US) dollar-denominated, Victoria Falls Stock Exchange (VFEX) has gained significant traction since its launch in 2020, as the number of listings on the bourse continues growing and the flow of US dollar liquidity increases in the formal economy.
VFEX, a subsidiary of the Zimbabwe Stock Exchange (ZSE) was designed to attract global capital and bolster foreign investor confidence in Zimbabwe’s capital markets.
The forex based stock exchange presents a unique opportunity for companies to raise capital in foreign currency while the advantages of listing on the bourse are manifold.
Companies gain the ability to raise capital in hard currency, providing a safeguard against foreign exchange fluctuations and economic instability.
The VFEX also offers various securities to raise capital, including debt, equity, exchange-traded funds (ETFs) and Real Estate Investment Trusts (REITs), giving firms flexibility in their financing options.
According to the VFEX, shareholders also benefit from tax incentives, which can boost overall returns.
“The decreased trading fees on VFEX can potentially lead to improved liquidity, encouraging active participation and investment within the exchange. Businesses listed on VFEX also enjoy enhanced profiles domestically and internationally, attracting more attention and potential investors.
“With the trading currency solely in USD, VFEX eliminates the exchange control risk typically associated with operating in Zimbabwe’s local currency. This further alleviates concerns for foreign investors, who can make confident decisions based on stable and predictable currency valuations,” said the bourse on its website.
The VFEX has become a critical component of Zimbabwe’s ongoing efforts to revitalise its capital markets and attract global investment by providing a platform that caters to foreign investors and offers stability in a hard currency ecosystem, the exchange is stimulating economic growth and fostering a supportive investment environment.
Last Friday, Zimplow Holdings Limited joined 12 other stocks already listed on the VFEX after delisting from the ZSE
In a notice to shareholders, the firm said: “The company is expected to delist from the ZSE on 12 July 2023, followed by its listing on the VFEX on Friday 14 July 2023.”
Among other companies listed on the VFEX these include Innscor Africa, Seed Co International Limited, Caledonia Mining Corporation, Padenga Holdings, Bindura Nickel Corporation and Nedbank Zimbabwe.
As well as Simbisa Brands Limited, Karo Holdings Limited, National Foods Limited, Axia Corporation Limited, West Property Holdings and First Capital Bank.
ZSE chief executive officer (CEO), Mr Justin Bgoni has been on record stating that companies seeking to expand or list on VFEX could now tap into a reliable avenue for accessing foreign capital, while international investors can take advantage of the favourable investment climate and potential returns.
“As VFEX continues to establish itself as a robust financial services centre, Zimbabwe’s economy is poised to benefit from increased investment and foreign exchange inflows, creating a dynamic cycle of growth and prosperity.
“One of the biggest challenges cited by foreign investors is that Zimbabwe is risky. If you want to raise money it will be in the Zimbabwe dollar. So even if one raises capital, there is no guarantee of getting the US dollar on the interbank for capital projects.
“That is why we came up with the VFEX where trades will be in hard currency because under the current laws ZSE can only trade in Zimbabwe dollars yet there is a huge appetite for US dollars,” said Mr Bgoni.
Online Reporter