Zimbabwe Says Launching of Second Stock Exchange Will Boost InvestmentsAfrican News, Business, Featured, Latest News Monday, October 26th, 2020
(AFRICAN EXAMINER)-The Zimbabwe government believes the launch of the Victoria Falls Stock Exchange (VFEX) will attract the much needed foreign direct investment and reposition the country in the global market.
Finance Minister Professor Mthuli Ncube launched the bourse on Friday and said VFEX marks the beginning of a journey towards establishment of an offshore financial services centre in Victoria Falls, the country’s prime resort town.
Victoria Falls is key to Zimbabwe because of tourism and government wants to leverage on the town top lure international investors at a time when the country’s image is battered by alleged human rights abuse, political turmoil and corruption.
The bourse is a wholly owned subsidiary of the Zimbabwe Stock Exchange and will be denominated in United States dollars as a way of reducing perceived risks.
It targets international companies particularly the mining sector.
“The establishment of the Victoria Falls Stock Exchange is one of the many initiatives implemented by government to stabilize our economy and attract foreign direct investment. Victoria Falls is a potential offshore financial hub and has an opportunity to transform the country into a financial hub of the region,” said Ncube.
He said government resolved to open the second stock exchange and create a global platform for the trading of stocks in foreign currency in a way that promotes foreign investment into Zimbabwe and the region.
“Zimbabwe is aware of expectations of the international community in terms of repatriation of investments and the launch of the VFEX will reduce foreign currency and settlement risk for international investors, as well as deal with exchange rate risk from portfolio investments in the country.
Ncube said desperately needs foreign investment to close funding gaps required to grow the economy.
A few years ago the Zimbabwean government designated Victoria Falls into a special economic zone whose focus is to lure investment into the country’s tourism region to develop hotels and other offshore financial facilities.
“It is a key pillar in supporting efforts to grow Victoria Falls’ status as not just a special economic zone but an offshore financial hub. Apart from being a conduit of portfolio investments and foreign direct investment into Zimbabwe, the long term ambition is to make VFEX a platform of trading securities in Africa in hard currency
“VFEX will provide gateway for companies in Zimbabwe, SADC and the rest of Africa to raise capital in foreign currency and also provide investors to trade in the secondary market in hard currency,” Ncube said.
Companies that list on VFEX will benefit from fiscal and non-fiscal incentives such as five percent withholding tax to foreign investors and exemption from capital gains and reduced exchange control restrictions.
The tax incentives will create confidence in the operation of the offshore financing centre and attract capital from the globe.
The bourse will also be an opportunity for pension funds to invest in foreign currency denominated securities and enhance their ability to diversify currency risks and therefore grow sustainable assets value.
The bourse starts trading this week and so far only SeedCo International has listed.
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