Diaspora keen on Treasury USD bonds

FINANCE and Economic Development Minister Mthuli Ncube has said the Diaspora community has shown keen interest to invest in the US dollar bonds the Government intends to launch and list on the Victoria Falls Stock Exchange (VFEX) this year.

A Government bond is a form of security sold by the State. It is called a fixed income security because it earns a fixed amount of interest every year for the duration of the bond.

The purpose of a bond is to raise money to finance key Government operations, including obligations such as paying off debts.

Treasury said last year it would issue US$100 million worth of Government bonds to be listed on the United States dollar-denominated exchange, VFEX during the first quarter of 2022 as part of deficit financing.

VFEX is a subsidiary of the Zimbabwe Stock Exchange (ZSE), launched late last year as part of efforts to attract global capital and restore foreign investor confidence in Zimbabwe’s capital markets while also helping companies to raise capital in foreign currency.

In his 2022 National Budget, Minister Ncube said the bond would be issued to reduce the cost of borrowing and deepen the capital markets, with the objective of developing the Victoria Falls Offshore Financial Services Centre in order to attract foreign capital.

Minister Ncube, addressing journalists via Zoom platform from Dubai, UAE, where he was part of the Presidential delegation at Expo 2020 Dubai, said the diaspora were keen to participate and invest in agriculture and the health sectors.

“They are very keen on participating in the diaspora bond. So we explained to them that we intend to launch a bond very soon in US dollar terms, which we wish to list on the Victoria Falls Stock Exchange (VFEX) and we target them as investors in that bond,” he said.

He added that the Government will in future launch a dedicated diaspora bond, hence will evaluate and come up with an instrument to that effect.

Minister Ncube was part of a delegation led by President Mnangagwa in Dubai to attend Zimbabwe’s National Day at the expo, which was held on March 14, 2022.

He said the President engaged with the diaspora and business community during which many business and entrepreneurs indicated interest to invest in Zimbabwe.

“Some of the engagements with diaspora indicated that they are very keen to come back and invest in Zimbabwe particularly in the agricultural and health sectors.

“Some of them want land, some in the health sector, and they are very keen such that there is an active engagement platform with them in terms of the diaspora desk so that they are able to interact with whoever they want to have access to. We, as the Government, made an undertaking that we will work better with them,” he said.

Minister Ncube noted that trade between the UAE and Zimbabwe had grown exponentially to over US$1,5 billion.

The Treasury chief also said the Government was strengthening the sovereign wealth fund (SWF) after it appointed a new board amid plans to add more assets.

“The sovereign wealth fund for future wealth for generations has not been active, but now it is beginning to be active.

“We are looking at adding more assets such as gold, coal as well as oil and gas assets. So going forward it is going to be a serious institution that will serve its purpose,” he said.

Commenting on the impact of rising global fuel prices on Zimbabwe, Minister Ncube said theGovernment was not going to review growth and inflation figures, but would continue to watch and act appropriately in terms of the fuel subsidy programme, possibly through changing levies on fuel price.

“Therefore, we will continue to watch the situation and make appropriate communication in due course. “But we have done our calculations and strategies on the fuel subsidy and we have actually been running this subsidy for the last five months and we had not publicly announced it, but we have been doing it,” he said.

He said the way the intervention was designed reduced the fuel levy from 12,7 US cents
per litre to 11,4 US cents done to ensure Government lowers pressure on traders to
increase fuel prices.
“If you notice since about October last year, the fuel price has been largely stable and we
will keep it going for as long as we can afford it, but it is necessary to cushion
consumers,” he said.-The Herald