Financial services firm Finsec says it is stepping up efforts to transform Zimbabwe’s capital markets through technology-driven financing solutions, tokenisation and the development of a stronger corporate debt market.
This comes as the listed securities exchange works to address persistent liquidity constraints and widen investor participation.
Chief executive officer Mr Collen Tapfumaneyi said while Zimbabwe had developed market infrastructure comparable to some of Africa’s more advanced financial markets, the country’s biggest challenge remained low liquidity and limited participation.
“Our big problem is liquidity. Our big problem is inclusivity. The capital market is still a bit exclusive.
“In terms of market infrastructure and product development, we actually compete very favourably with even the so-called more advanced markets.
The products are there, but what we now need is broader participation,” he said in an interview.
He noted that technology would play a central role in overcoming barriers that have constrained growth in the country’s capital markets.
“Technology is what will address our challenge.
“The participation or activity challenge is largely caused by a lack of access and technology addresses that,” he said.
“It also addresses perceived risk. Technology enhances investor protection by ensuring transparency and traceability of transactions while improving security. Most importantly, it improves accessibility, allowing more people to participate in formal financial markets.”
Mr Tapfumaneyi acknowledged that although Zimbabweans were becoming increasingly aware of alternative financing models and digital investment products, more work was required to build public confidence following losses suffered by some investors in informal investment schemes.
“There is a lot of work to be done because people trade carefully. We are competing with activities that happen in the shadows, and sometimes people lose money. The challenge is helping investors distinguish properly regulated products from informal schemes,” he said.
At the same time, he warned against imposing excessive regulation that could discourage participation.
“If we overdo regulation, we chase away participation. When laws, rules and regulations become too stringent, the cost of participation becomes too high. We have to strike a balance.”
Mr Tapfumaneyi said Finsec was positioning itself to become a key facilitator of financing across several sectors of the economy, particularly agriculture.
He said the company’s role as operator and founder of the Zimbabwe Mercantile Exchange (ZMX) placed it at the centre of financing opportunities linked to the country’s agricultural value chain.
“Finsec is the operator of ZMX. Agriculture is the backbone of our economy and from production to marketing, there is significant economic activity that requires financial intermediation.
“That presents enormous opportunities for Finsec to facilitate financing while ZMX facilitates agricultural marketing,” he said.
Beyond agriculture, the company is also preparing to expand into asset tokenisation while supporting the development of Zimbabwe’s corporate debt market.
“Tokenisation is a big development that will position Finsec in the near future. We also have an underdeveloped debt market in this country and we are focusing on developing corporate debt markets anchored on agriculture and tokenisation,” he said.
Mr Tapfumaneyi said the Zimbabwe Mercantile Exchange had recorded strong growth since its establishment, with rising volumes and increasing confidence among both buyers and sellers.
“It is growing in leaps and bounds. If you follow the weekly auction results, you will see that volumes have been increasing, confidence in the platform has been rising and activity is quite commendable.
“We have also seen active participation by financiers. Banks have come on board, and capital market investors are now providing liquidity to facilitate trade finance on ZMX,” he said.
On C-Trade, Zimbabwe’s retail-focused mobile investment platform, Mr Tapfumaneyi said the exchange’s performance had been mixed despite successfully expanding retail participation in the capital markets.
“C-Trade has established itself at the centre of retail participation, but it can only do so much. We have not had many exciting listings or new issuances,” he said.
He noted that vibrant capital markets depended on a steady pipeline of new investment opportunities, recalling periods when several initial public offerings were launched annually and attracted strong investor demand.
“What makes capital markets exciting is a continuous flow of issuances. That is where platforms like C-Trade perform at their best,” he said.
Mr Tapfumaneyi said Finsec was working to address the shortage of new investment products by introducing innovative offerings tailored for retail investors.
“We are addressing the drought of issuances. We are innovating to ensure there will be frequent offerings that suit the requirements and needs of retail investors. Watch this space.”
He said innovation would remain central to the company’s strategy as Zimbabwe’s financial markets continue to evolve.-newsday
