Govt should develop capital markets, ZSE

The Zimbabwe Stock Exchange (ZSE) has said Government should play a big role in the development of capital markets, especially participating through the bond market.

ZSE chief executive, Justin Bgoni, speaking at the Zimbabwe Annual Investor Forum held in Harare yesterday, said the bourse is encouraged with the Government’s intention to come to the market and raise money.

“You need the Government in your capital markets for it to develop,” he said. He added that at other exchanges in the region like Zambia, Botswana and even up to Rwanda, in terms of the bond market, the Governments are playing a very big role.

“We need it because we need a proper set of benchmarks for interest rates, what we call yield curve, that is what is required in the market,” said Bgoni.

He noted that everyone would also want the Government to be transparent in terms of the money they are raising as the more they come to the capital markets to raise money, the more transparency it is going to be.

“We are encouraged that the Government is going to do what other governments have been doing, which is come to the market to raise money.

“For example, if we take the infrastructure bond, it will be a long term asset and for them to raise a bond like that, we feel it will be oversubscribed,” said Bgoni.

He indicated that there is a lot of money in the market just sitting and not generating any return.

Finance and Economic Development Minister, Professor Mthuli Ncube in the 2022 National Budget, said that the Treasury will issue US$100 million worth of Government bonds on VFEX in 2022 as part of deficit financing.

Mthuli said the bonds would be issued to reduce the cost of borrowing and deepen the capital markets, with a particular objective of developing the Victoria Falls Offshore Financial Services Centre aimed at attracting foreign capital.

VFEX, a subsidiary of the Zimbabwe Stock Exchange (ZSE), was launched as part of efforts to attract global capital and restore foreign investor confidence in Zimbabwe’s capital markets and help companies raise capital in foreign currency.

Since inception, the listed companies on VFEX have grown to four counters, namely SeedCo International, Padenga Holdings, Caledonia Mining Corporation and Bindura Nickel Corporation.-ebusinessweekly