‘Capital market players must help policy setting’

Capital Markets players must engage the Government during policy formulation to ensure policies that attract long-term capital for infrastructure development projects and accelerate economic growth towards the attainment of Vision 2030 targets.

Players in the Capital Markets industry also play a pivotal role in improving financial inclusion for Zimbabweans while providing instruments for hedging against inflation.

Finance, Economic Development, and Investment Promotion, David Mnangagwa, made these remarks at the 2023 edition of the Capital Markets Awards (CMA) in Harare, hosted by Business Weekly in partnership with Financial Markets Indaba last Friday.

“The ministry applauds the capital markets industry in acknowledging such efforts and its contribution towards economic growth. Capital markets help the Government achieve its priorities set out in the National Development Strategy 1 (NDS1) and Vision 2030, by facilitating long-term capital raising for the productive sectors, improving financial inclusion and mobilising resources for infrastructure development and inflation hedging among others.

The Government is working, through a coterie of policy initiatives, to transform Zimbabwe into an empowered upper-middle-income society by 2030.

“There is a twin relationship between the Government and capital markets such that a loss of confidence does not only affect the Government, but also has a larger impact on the capital markets.

“So, whenever there is a policy formulation, it is very important that capital markets and financial markets assist the Government in wealth creation for the development and prosperity of the nation,”.

“We continue to urge our market players in the capital markets to engage the Government whenever policies are being formulated. There is usually a wait-and-see approach. Market players wait to see the outcome and then wait to innovate around the outcome, but instead, there should be a synergy,” he said.

He said this will go a long way in ensuring that the thriving capital markets reach their full potential.

“Overall, the globe is going through a bit of a turmoil, starting with the decline that came with the Covid-19 and just after that came the Russia-Ukraine conflict, and the effects were felt around the whole world in terms of the disrupted supply chains.

Zimbabwe is also going to be the most affected by the El Nino, as much as it is a Southern African phenomenon.

The deputy minister said Zimbabwe also received Special Drawing Rights from the International Fund, as part of the global lender’s efforts to cushion countries against the impact of Covid-19 pandemic, which forced Governments worldwide to impose national lockdowns to contain the spread of the disease.

SDR refers to an interest-bearing international monetary reserve asset created by the IMF to supplement the existing money reserves of member countries.

“We took about US$1 billion at a lower interest rate below 1 percent, but just this year that interest rate changed to 4 percent,” the deputy minister revealed, adding that “now we have provision for that in the budget”.

He emphasised that going forward, this means that Zimbabwe had to focus more on making the most out of its domestic resources, with the help of the capital markets players, whom he described as extremely key and important.

“The Victoria Falls Stock Exchange (VFEX) is set to launch a minerals commodities exchange in the first quarter of 2024. Most of our recipes are from minerals so that means there will be a lot more for market players.

“This is a welcome development as it will broaden the exchange and the country’s capital markets, as well as expand capital markets services for the mining sector which is expected to grow in excess of US$12 billion target this year.

“The Government will continue rolling out policy initiatives to promote capital formation and investment. Recently His Excellency the President, Dr Mnangagwa announced that Zimbabwe will maintain the multi-currency system until 2030.

He said this would go a long way in fostering stability in the market and the economy as a whole while a gradual de-dollarisation roadmap is being formulated.

This comes after Zimbabwe signed a memorandum of understanding last Thursday with United Arab Emirates Company, One World Group, which is expected to invest in US$3 billion across various sectors of the economy.

Business Weekly Editor, Herbert Zharare, also encouraged capital markets players to play an active role in capacitating and mobilising capital for small enterprises to stimulate business growth while demystifying the profession to young aspiring youths so that they also participate in the activities of the capital markets.

“All the people here are winners. You have done a splendid job in helping Zimbabweans, and big corporations and my passionate plea is for you to continue helping the emerging small companies to mobilise capital and grow together with them.

“We want you to demystify this profession for young professionals so that they continue to demonstrate interests in the capital markets,” said Mr Zharare.

The winners of the 2023 CMA were First Mutual Holdings — Best Performing Listed Company, Old Mutual Investment Group was awarded the Best Interest Bearing Fund, Morgan & Co. scooped the Best Stockbroker of the Year (Firm) award while the Best Investment Research Provider award went to IH Securities.

ESG Award of the Year (Listed Entity) was won by Econet Wireless Zimbabwe, the Best VFEX Listed Company award went to First Capital Bank, the Best Investor Communication award — went to Econet Wireless Zimbabwe, the Best Equities Fund went to Zimnat General Equity Fund, the Best Stockbroker (Individual) was won by Mr Langton Nyatsanza, while the Lifetime Award was awarded to Mr Tafadzwa Chinamo.-herald