VFEX growth should be matched by city growth

Leonard Ncube
Feature

THE Victoria Falls Stock Exchange (VFEX) was launched on 23 October 2020.

VFEX is a wholly owned subsidiary of the Zimbabwe Stock Exchange (ZSE) and is expected to help reduce foreign currency and settlement risks facing the economy.

The major aim was to help the country build a pioneering offshore financial market and lure the much-needed offshore investment.

The opening of the VFEX kick-started the operationalisation of the Victoria Falls Special Economic Zone, which is one of the key initiatives being implemented by the Government to stabilise the economy and attract foreign direct investment.

The resort city of Victoria Falls was designated as a hub for tourism and financial services under the Special Economic Zones initiative with a view of attracting tourists as well as luring investment through tourism investment.

Just two years and two months have passed and the bourse has attracted eight counters, with the 9th, Innscor Africa Limited, listing next week Friday.

Axia Corporation Limited will also soon list on the VFEX after its shareholders passed three critical resolutions that further pave the way for the new listing.

Hybrid seed producer and distributor, SeedCo International Limited was the first to list on the VFEX when the bourse opened its doors and has been joined by New York and London-listed gold miner, Caledonia, crocodile skins and meat processor, Padenga, Bindura Nickel Corporation, Nedbank Zimbabwe, pan-African fast-food group, Simbisa Brands Limited, Johannesburg-traded metals producer Tharisa, Karo Holdings Limited and recently food giant, National Foods Limited.

The Government introduced VFEX in a bold move that also looks into the future, recognising that the economy had been short of foreign currency for a long time.

This had made it difficult for companies to finance importation of critical raw materials, spares, machinery and other critical items, and local companies needed to raise money to finance their operations yet there were very few platforms for them to be able to do that effectively.

It recognised that some companies, especially large ones with a regional or global exposure, needed the flexibility that comes with trading in forex.

Also, the Government noted that some firms needed the predictability that comes with trading in the United States dollar, and listing on VFEX gives counters an international feel as they trade exclusively in a global currency, thereby unlocking value and foreign direct investment.

The move followed the approval by the Securities and Exchange Commission of Zimbabwe (SECZ), and signing a memorandum of understanding with the Reserve Bank of Zimbabwe guaranteeing smooth trade settlement with investors.

When he launched the VFEX in 2020, Finance and Economic Development Minister Professor Mthuli Ncube said there was a need for the creation of globally recognised stock exchanges in Africa, those that arise from environments that are devoid of any negative impact of exchange rate fluctuations.

Recently, he said Government was elated as the VFEX had outperformed itself, becoming the first bourse to attract many listings in just two years.

Prof Ncube reaffirmed Government support for the VFEX to make it a preferred destination for investment.

“The current rules and regulations on the VFEX go a long way in making the market irresistible to foreign capital, and we look forward to witnessing more listings this year on VFEX,” he said.

Industry and Commerce Minister Dr Sekai Nzenza implored managers at VFEX to intensify their marketing initiatives, not only on the local market, but abroad as well so that the profile of that market becomes international as more global names list there.

“In October 2020 I was here in Victoria Falls at the opening of the exchange and today I have witnessed tremendous growth the exchange has undergone in such a short space of time. The VFEX is only in its third year of operating and has managed to have eight listings thus far,” she said.

VFEX allows listed companies to raise and trade their stock in any convertible hard currency, limiting the exchange risk.

Victoria Falls was conferred a city in 2019 and it is also Zimbabwe’s prime destination.

The city’s economy is hinged on tourism comprising hospitality, travel and conservation.

No tourism business has listed on the bourse as yet although African Sun Limited has shown interest.
ZSE chief executive Mr Justin Bgoni once challenged the tourism industry to see value in the new stock market.

“We are doing this for the development of the country. We know that for the country to do well it needs foreign investment and this is the platform that we hope will bring foreign investors to the country. There is less risk because it’s in United States dollars and again it will be easy and cheaper to move money in and out,” he said.

Government has committed that the VFEX will remain a foreign exchange market in line with Vision 2030, which requires a lot of foreign investment, as the country needs a vehicle that will make it attractive to foreign investors hence the VFEX which has tax benefits.

The sustenance of the bourse and its benefits locally will surely depend on support from the local tourism industry.
Victoria Falls City Town Clerk Mr Ronnie Dube recently said the tremendous growth of the bourse is a huge boost for marketing of the country’s prime tourism destination.

He said the growth of the exchange is synonymous with the growth of the city, which has started reaping positive results from the VFEX as both share the same drive as they were both born during the same year.

“The fact that people are listing on the VFEX becomes public knowledge locally and internationally and this has had an impact on people to want to visit to see the place where the stock exchange has been trading. We are beginning to see the positives from the VFEX in relation to the marketing of Victoria Falls as a tourist destination.

“So, we have quite a lot in common, which is quite symbiotic and what that means is that there is so much confidence in Victoria Falls as a city and in the stock exchange which is good for the local economy and that of the country,” he said.

To him, listing on the VFEX also adds a feather on the tourism cap. — @ncubeleon.