The Zimbabwe Stock Exchange (ZSE) is banking on a platform that provides working capital solutions for Small to Medium Enterprises and established businesses as it moves to diversify its revenue streams.
The platform, the Zimbabwe Receivables Marketplace (ZRM), was incorporated last year as a joint venture between the ZSE and Harare Receivables Exchange (Private) Limited to offer working capital solutions through receivables discounting and trading.
The platform exists to facilitate the reallocation of capital from institutional investors to corporations looking for working capital.
In a statement accompanying the bourse’s 2020 annual report, ZSE chairperson Caroline Sandura said ZRM will provide an alternative investment class for institutions.
“We will also focus on growing ZRM in terms of adding financiers and buyers. ZRM represents the greatest potential in terms of diversifying the ZSE revenue from trading related business,” Sandura said.
The ZRM which was launched in August 2020 is expected to provide working capital solutions through receivables discounting.
This allows ZRM to provide a supplier who delivers goods and services to customers (buyers) by creating invoices with the supplier uploading the invoice onto the ZRM platform.
Financiers bid and the winning bidder advances funds to the supplier.
It is understood that companies providing goods and services on credit terms and wishing to raise working capital based on the outstanding invoices with suppliers should be tax compliant and meet the criteria specified by ZRM.
Financiers are institutions or high net worth individuals with sufficient funds (as determined occasionally by ZRM) that can compete on bidding for the invoices registered by the sellers.
Sandura said ZSE would also focus on continuing to lobby for favourable policies for the capital markets, key being the amendment of the Finance (No.2) Act of 2020 in order to remove limitations for pension funds on real estate investment trusts.
She said another strategy is to increase the listings on VFEX and also encourage market making on the market.
Inflation-adjusted revenue was 6% up to ZWL$123.4m from prior year of ZWL$116.5m.
Group revenue was spurred by increased market outturn and new products launched during the year.
New products launched during the year included the Training Institute, ATS Market Access fees and data vending.
The group revenues include income contribution of ZWL$1.4m from VFEX Limited following its commencement of trade in October 2020.
The business achieved an operating profit of ZWL$0.864m compared to ZWL$54.8m in 2019.
Operating profit was weighed down by impairment of unquoted investment.
The group operating expenses were down 5% to ZWL$88.2m from ZWL$93.1m in the prior year due to cost containment measures in an inflationary environment. Driving operating costs was incorporation and launch costs of VFEX.
The increase in staff costs was due to the increase in the head count for the ICT developers set up to implement the ZSE mobile application and related ICT projects.
The group posted total comprehensive income for the year of ZWL$82.4m compared to ZWL$20.8m in the comparative period of December 31 2019.
The group’s total assets more than doubled to ZWL$211.8mas at December 31 2020 from ZWL$105.8m as at December 31 2019.
The growth was achieved through the launch of new business such as Victoria Falls Stock Exchange Limited, a US$ exchange.
Sandura said ZSE Direct mobile application was internally developed to promote retail investors participation on the equities market in line with the group’s growth strategy and income streams diversification. The group also established a depository arm which will facilitate and support launch of new products.
Interest bearing borrowings increased to WL$28.5m from ZWL$11.178m to support working capital and capex.