LIVINGSTONE MARUFU
Zimbabwe’s leading financial services group, Old Mutual Zimbabwe and cement maker, PPC Limited have escalated talks with the government over the restoration of their fungible stocks, Business Times can report.
Government, last year ordered the suspension of dual listed Old Mutual, PPC and Seed International shares from trading at the Zimbabwe Stock Exchange (ZSE) arguing their stocks had become vehicles for repatriating investment out of the country, fuelling currency distortions and a spike in exchange rate.
Finance Minister, Mthuli Ncube said the three counters should delist from the ZSE and migrate to Victoria Falls Stock Exchange (VFEX). Seed Co International has since listed on VFEX after delisting from the ZSE. Its fungibility was also restored.
ZSE chief executive officer Justin Bgoni said the bourse was eager to see a quick review on the status of Old Mutual and PPC.
“PPC and OM are discussing privately with the government on the matter but in the background, we are trying to do our best for the parties to reach an agreement,” Bgoni said.
“Since these discussions are being done privately, we are unable to provide timelines but we hope that they will be resolved in the shortest possible time.”
The duo was expected to list on the VFEX but this has not happened.
Zimbabwe’s insurance sector, the Insurance and Pensions Commission (IPEC) also voiced its voice on the issue saying it was critical to have a quick resolution to the matter.
IPEC highlighted that the continued suspension of Old Mutual and PPC needed a resolved quickly as several local pension funds have their money tied up in the two counters.
Market watchers believed that the reluctance by the two companies to list on VFEX signals a lack of confidence in the new stock market.
The US$ denominated stock exchange, created out of the need to attract international capital and hard currency funding for local entities, has been struggling to attract new listings since its launch in October last year.
This has been attributed to the policy inconsistency and a trust deficit and dividend remittance bottlenecks, among other problems.
Moreso, Zimbabwe has been red flagged as a high risk and unsafe to invest in due to its unpredicted legal system and policy inconsistencies.
According to Exchange Control directive RV177/2020 issued by the Reserve Bank of Zimbabwe, all foreign currency inflows invested into a resident company listed on the VFEX shall be from free funds or offshore funds and these investment funds shall be credited to the listed corporate’s investments foreign currency account.
The central bank also said that the funds held in the investments FCA shall not be subject to any surrender requirements and shall be held for an indefinite period for use by the listed company.
The directive also states that exchange control approval will be required from resident companies listed on the VFEX, for opening an offshore account for the purposes of receiving investment proceeds.
Non-resident companies listed on the VFEX will receive investment funds in local or offshore investment accounts.
The non-resident company can keep funds raised from the listing or the balance after investing the required amounts in Zimbabwe.
Foreign currency received by resident investors on the VFEX as disinvestment proceeds and dividends into their local FCA accounts, shall be eligible for meeting offshore payments as well as settling local obligations.
Dividend or disinvestment proceeds due to non-resident investors shall be freely remittable through the authorised dealer without seeking prior exchange control approval.
