Zimbabwe is planning to launch a stock exchange in the resort town of Victoria Falls.
To be named Victoria Falls Stock Exchange, it will become the second in the Southern African country and will be managed by the Zimbabwe Stock Exchange (ZSX), the main bourse in the capital of Harare.
According to Zimbabwe’s finance minister, Mthuli Ncube, VFEX will be dominated in foreign currency and aimed to attract foreign investors and global capital, especially in the mining sector.
His tweet on the matter suggests that the new opening will be a global stock exchange, which it will make possible by partnering with other global exchanges. While enquiries will be made at ZSE, foreign global companies invested in Zimbabwe can list on the new exchange.
Ncube also said that the hard currency exchange would run off the ZSE system to have continuity in securities governance. However, plans exist to have an external back-office for ease of settlement and confidence.
The USD 18 Bn economic stimulus is currently in talks with actively discussing with the London Stock Exchange, JSE in South Africa and Dubai’s DFM for possible collaborations.
By opening VEFX, Zimbabwe joins South Africa as the African countries with more than one stock exchange. It will bring the number in the continent to around 30, although only a handful of them stand as major.
For a stretch of years, Zimbabwe has been in the mire of currency-related struggles. The back and forth of having 2 currencies in a single country has taken tolls on its economy. In 2019, Zimbabwe’s GDP contracted by 8.3 percent, and the IMF predicts it will slump by another 7.4 percent in 2020.
Introducing a new currency in 2019 without first addressing key underlying economic fundamentals resulted in problem Zimbabwe is still trying to solve. The problems started in 2009 when the country ditched its failing sovereign currency in favor of a basket of foreign ones, chief of which was the USD.
“Dollarising” the economy only resulted in a major bump in 2015 when, greenbacks started vanishing from the formal banking system.
Featured Image: Paul Sayrol va Unsplash
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