PHILLIMON MHLANGA
Zimbabwe’s capital markets regulator, the Securities and Exchange Commission of Zimbabwe (SecZim) is pushing for a comprehensive review of the country’s laws governing the sector in order to enhance investor protection and market expansion, Business Times can report.
This was revealed by SecZim CEO, Anymore Taruvinga who said government assistance in removing the impediments currently limiting the market from fulfilling its role of intermediation, risk transfer and price determination is essential.
“We are looking at capital markets development. But to do that, there is a need for a comprehensive review of the regulatory framework to help shape the growth of the capital market and investor protection. For example, at the moment, there is no provision for virtual assets. We also don’t have a robust framework for SMEs as well as regulations to establish commodities exchanges,” Taruvinga said.
He added: “Another issue is that the Government is issuing a lot of Treasury Bills (TBs), we want this to be traded on the stock market.”
Over the years, the Government has been issuing TBs worth billions of dollars.
However, since commercial paper led to an increase in the money supply, it became clear that this was one of the main reasons for economic vulnerability.
In stable economies, TBs are considered to be one of the safest and go-to investment destinations because they are typically seen as liquid and risk-free, due to their backing by governments.
In Zimbabwe, though, this has not been the case.
Over the last few years, local banks have been scrambling for government assets and have been using TBs as a way to increase their revenue streams and generate income, despite market concerns that the government might default on maturities.
In order to comply with regulations that require them to maintain approximately 30% of their assets as liquid assets, banks were the largest participants, amassing billions of dollars in TBs on their books.
SecZim has the support of Parliament in its efforts to get the regulatory framework reviewed.
Recently, Clemence Chiduwa, the chairman of the Parliament Portfolio Committee on Budget, Finance, and Investment Portfolio told Business Times that Zimbabwe’s capital market should be vibrant to support economic recovery and ensure that companies have access to funding sources.
According to Chiduwa, vibrant capital markets would also support Zimbabwe’s digital transformation and help the country develop a stronger, more resilient economy.
The Victoria Falls Stock Exchange, FINSEC, and the Zimbabwe Stock Exchange are participants in the country’s capital markets.
There are also stockbrokers, who are agents who buy and or sell securities on behalf of the investors as well as central securities depository firms such as the Chengetedzai Depository Company and the Zimbabwe Stock Exchange central securities depository, and these hold securities on behalf of investors.
He said: “We want a vibrant capital market. The ZSE and the VFEX, we need them to be vibrant. We want a capital market that is going to aid the development agenda of Zimbabwe.”
It is anticipated that the capital market would support financial inclusion, ease of doing business, and sustainable and equitable economic growth.
