‘VFEX widens capital inflows into the economy’

CAPTAINS of industry and commerce have commended the impressive growth of the
Victoria Falls Stock Exchange (VFEX), which continues to attract high-value counters,
saying the young bourse has become a critical platform in widening capital inflows into
the economy.

The Confederation of Zimbabwe Industries (CZI) has since rallied its members to invest
in the bourse to benefit from its incentives, including being able to raise capital in
foreign currency.

This comes at a time when the VFEX has registered an 18-fold jump in trade volumes to
close 2022 at US$12 million compared to US$619 000 in the prior year.

The bourse experienced rapid growth in the last quarter of 2022 injecting much-needed
confidence and cementing the country as a safe investment destination.

The USD-denominated VFEX is a subsidiary of the Zimbabwe Stock Exchange (ZSE)
launched in 2020 as an off-shore financial services center.

Its main objective is to attract global capital and restore foreign investor confidence in
Zimbabwe’s capital markets while helping companies raise capital in foreign currency.
Its establishment is largely expected to go a long way in buttressing the Victoria Falls
Special Economic Zone.

VFEX is fast attracting listings as it offers a raft of incentives including tax exemptions
on capital gains and the ability to repatriate funds from a country where foreign
exchange is in short supply to attract global capital.

For instance, investors who participate in the VFEX benefit from the ability to move their
capital and dividends in and out freely, low transaction costs, and tax incentives that
include a five percent dividend withholding tax for foreign investors, as well as
exemption from capital gains withholding tax for all investors and minimal currency
risks.

In written responses CZI president, Mr Kurai Matsheza, said the creation of VFEX was a
great idea that will help Zimbabwe in addressing some of the economic challenges
related to raising capital for business expansion.

“Considering the forex challenges bedeviling our economy, the introduction of VFEX was
a wonderful innovation,” he said.

“This obviously widens the capital flows and it’s easy to attract foreign direct
investments. Entities that require United States dollar capital are encouraged to list on
VFEX because there are numerous benefits.

“Some of the benefits of listing on VFEX include attraction of international capital,
repatriation of dividends are easier, forex retention levels are better than for ordinary
exporters operating in Zimbabwe and corporate tax rates are lower.”

Commenting on the same, Zimbabwe National Chamber of Commerce southern region
chairperson, Mr Mackenzie Dongo, said VFEX was a place where international investors’
long-standing concerns of repatriation challenges have finally been addressed.

Zimbabwe National Chamber of Commerce chairman Mr Mackenzie Dongo
“To the companies listed on the VFEX, there are benefits where the money raised is not
subjected to immediate liquidation and there are also tax benefits/incentives such as
tax-free incentives on tax heads such as dividends and capital gains,” said Mr Dongo.

“We encourage more businesses to join VFEX and tap on the above-mentioned benefits.”
At its inception, skeptics were quick to claim the bourse would suffer a stillbirth citing a
lack of perceived investor confidence.

Beginning with a single counter, SeedCo International in October 2019, VFEX has grown
to list seven companies by December 2022, while several more have joined the queue
after issuing notices to shareholders.

Others include Nedbank Zimbabwe, Caledonia Mining, Padenga Holdings, Simbisa
Brands, Karo Mining, and Bindura Nickel Corporation.

Already, National Foods Holdings Limited, SeedCo Limited and Axia Corporation Limited
boards have approved the migration to VFEX from ZSE. Financial services group
GetBucks has also indicated plans to migrate to the VFEX-The Chronicle