IN a bid to pluck out Zimbabwe from international economic isolation and attendant regression, Finance minister Mthuli Ncube this week led a high-powered delegation of local business executives to a capital markets conference in London, one of the financial hubs of the world.
Global Financial Centres Index, the most authoritative benchmark of the competitiveness of the world’s leading financial centres, ranks London, United Kingdom, only second to New York, United States.
Ncube told two related events at the London Stock Exchange and Queen Elizabeth II Conference Centre in the British capital that Zimbabwe, which has been reeling under economic crisis for over two decades, is on course to fix the economy and reclaim its place in the progressive community of nations.
“Image building, international engagement, and re-engagement: The advent of the Second Republic ushered in a strategic opportunity to improve the country’s image and international relations,” he said.
“A good image and improved international relations will provide leverage for the country’s quest for competitiveness to attract investment, and promote economic growth and national wealth within the context of globalisation. The country is actively participating in among others, a community of nations at regional, continental, and international levels.”
Ncube added: “An increasing number of high-level visits/engagements continue to be held at the presidium, ministerial, and senior official level to confirm the Second Republic’s foreign policy of affirmation, engagement, and re-engagement with the entirety of the international community.”
Through the re-engagement drive, the European Investment Bank extended US$18 million to CABS to help businesses recover from the negative impact of the Covid-19 pandemic, he said.
The move has seen the international community engaging with Zimbabwe to find ways of making the country repays its debt and revives its economy, Ncube added.
“Let me now briefly talk about macro-economic and financial sector developments. Across the world, economies and financial sectors in particular are grappling with a myriad of issues, including geo-political tensions, the global pandemics, fintech developments, and climate change, brought challenges and in some cases opportunities,” he said.
“As a result, the global economy is projected to record a slowdown in economic growth as a result of tight monetary conditions as central banks fight inflation, declining investment, lagged effects of the Covid-19 pandemic, debt overhang in some countries, global supply chain disruptions and rising commodity prices emanating also from the Russia-Ukraine conflict, among others.
“Recently, the International Monetary Fund launched the April 2023 World Economic Outlook and the Global Financial Stability Report which, to some extent, acknowledges that the global economy is and will continue to face several risks.
“On the domestic macro-economic front, the current tight monetary and fiscal policies stance has allowed the government to anchor inflation and exchange rate expectations through measures designed to sustain price and exchange rate stability.”
Ncube said gold coins have been useful in providing a different investment instrument and mopping up excess liquidity in the market.
“The gold coins introduced in July 2022, continue to provide an alternative retail investment product for value preservation in the dual currency system and also serve as a liquidity mopping instrument over and above the foreign exchange auction system,” he said.
“The monetary policy measures implemented in 2022 provided some resilience in the economy against both domestic and global shocks and headwinds. This has seen inflation trending down, especially in the last quarter of 2022 as business confidence, industry activity and exports improved significantly.” Foreign currency earnings are surging, a positive indicator, Ncube said.
“More importantly, foreign currency receipts reached an all-time high of US$11.6 billion in 2022 against total foreign currency payments of US$8.6 billion, thus, significantly contributing to foreign currency liquidity in the economy,” he said.
“The rising foreign currency earnings for the economy are reflective of underlying growth under the Economic Growth and Stability Pillar. The improved current account performance is on account of export boosting measures such as improved access to forex through the auction system, restoration of export competitiveness through exchange rate stability and inflation control measures, containment of non-essential imports, as well as the positive impact of the re-introduction of a competitiveness enhancing domestic currency.
“In 2021, Zimbabwe was officially re-classified as a lower middle income economy by the World Bank, indicating that our economic trajectory remains firmly on course to achieving upper middle income status by 2030. The annual GDP growth for the past two years has averaged over 6.3%, well above the (National Development Strategy1) NDS 1 target run rate of 5%.”
Financial markets are critical for NDS 1’s success and Zimbabwe’s revival.
“On the financial markets front, this market plays a key role in contributing towards the achievement of NDS 1 objectives through facilitating long-term capital raising and short-term financing for inclusive and equitable real economic growth and development,” he said.
“One of the key objectives under NDS 1 and Vision 2030 is the strengthening of the banking sector and the deepening and diversification of our broader financial sector and capital markets. This is under pinned by continuous improvement in the prudential regulation frameworks of both banking and non-banking financial institutions.”
“Our business mantra, ‘Zimbabwe is open for business’ also applies to capital market investors, issuers and market intermediaries, foreign and domestic, including in particular Zimbabweans in the diaspora,” he added.
“In this regard, relevant legislation such as the Securities and Exchange Act, the Banking Act, and the Insurance and Pensions Act and all subsidiary Legislation is continually reviewed to enhance investor protection, promote market integrity and build investor confidence through ensuring a fair, efficient and transparent financial markets and which are supportive of the development aspirations of Zimbabwe,” he indicated.
Ncube said the establishment of the Victoria Falls Stock Exchange (VFEX) — as part of a broader agenda to set up an offshore Financial Services Centre in the Special Economic Zone in the resort town) — has presented an opportunity for a diversified investment base.
“The exchange is characterised by special features such as lower trading fees, zero capital gains withholding tax and lower dividend withholding tax for foreign investors,” he noted.
“To date, eight (8) listings have been done on the VFEX. Efforts towards raising awareness and international re-engagement, rolling out investor centric products and services, alongside an enabling operating environment will continue in order for us to achieve our goals.
“Government is also rolling out USD-denominated infrastructure related capital raising instruments, giving both local and diaspora-based Zimbabweans an opportunity to contribute towards the country’s infrastructural rehabilitation efforts, provision of basic utilities, among other projects.
“The Offshore Financial Services Centre Board to spearhead the centre has already been appointed, whilst regulations to guide its implementation are being finalised for gazetting.”
Some of the business executives who attended the conference included Tom Attenborough from the London Stock Exchange Victoria Falls Stock Exchange chief executive Justin Bgoni, Securities and Exchange Commission of Zimbabwe boss Anymore Taruvinga, Global Sovereign Debt and Strategic Asset Allocation managing director Brian Mangwiro, Reserve Bank of Zimbabwe Financial Markets director Azvinandawa Saburi, Insurance and Pension Funds Commission of Zimbabwe head Grace Muradzikwa, Zimbabwe Investment Development Agency chief executive Tafadzwa Chinhamo and Bard Santner Markets Inc chief executive Senziwani Sikhosana.
Caledonia Mining Corporation Vice-President (Corporate Development) Maurice Mason, Innscor Finance director Godfrey Gwainda, Seedco International Holdings chief executive Morgan Nzwere, Padenga Holdings Ltd Finance director Oliver Tendai Kamudimu, WestProp chief executive Ken Sharpe and Tharisa (Karo Mining) Head of Investor Relations and ComsIlja Graulich featured prominently at the conference.
Zimbabwe’s ambassador to the UK Christian Katsande also attended. A number of other companies are also attending and funded the event. The conference is organised by Financial Markets Indaba and Bard Santner Markets Inc, supported by government.-STAFF WRITER