Zim wants to create 'Africa's Dubai' at Victoria Falls

Zimbabwe plans to set up an offshore financial centre in the resort city of Victoria Falls that the government wishes to vie with the likes of Dubai and the Isle of Man to attract foreign investment.

"The trigger is the success of the VFEX," Finance Minister Mthuli Ncube said in an interview, a reference to the US dollar-denominated Victoria Falls Stock Exchange that's experiencing a listings boom. "We want to compete with any offshore financial centre in the world."

The project will "offer investors an environment comparable" to the Isle of Man, Mauritius and Dubai, he said.

Marc Holtzman, a US veteran banker with 35 years experience in emerging markets, has been appointed board chairman of the centre. Holtzman is also chairman of CBZ Holdings, Zimbabwe's biggest lender.

The financial centre will be a hard currency zone, based on US dollars, and offer tax incentives. Land has been set aside by the state to attract global banks to establish offices in the country, according to Ncube. The VFEX, which officially launched in October 2020, will be housed under the financial centre.

The bourse has seen a surge in listings particularly in the last quarter of 2022, attracted by the trade in US dollars, tax exemptions on capital gains and the ability to repatriate funds from a country where foreign exchange is in short supply. It now has eight traded businesses.

"Two more companies are coming and two more are seeking approval," Justin Bgoni, the chief executive officer at VFEX, said Monday by text message.

The listings on VFEX have led to de-listings on the main exchange in Harare, the Zimbabwe Stock Exchange, which trades in Zimbabwean dollars. Authorities won't attempt to dictate to firms which bourse to list on, as this is informed by their unique capital needs, Ncube said.

"Companies are free to choose where to list," he said. "I'm not too worried about companies moving across from the ZSE to VFEX."

Source: Zim wants to create 'Africa's Dubai' at Victoria Falls (20/02/2023)

President launches Victoria Falls Stock Exchange

 President Mnangagwa on Thursday officially launched the United States dollar-denominated Victoria Falls Stock Exchange (VFEX), which is a subsidiary of the Zimbabwe Stock Exchange (ZSE).

He also oversaw the listing of gold mining firm, Caledonia Mining Corporation, on the VFEX.

President Mnangagwa said the VFEX will drive domestic and international investments into the country.

“The Victoria Falls Stock Exchange is expected to drive domestic and international investments, which are a key requirement for the attainment of our vision of a prosperous and empowered upper middle-income economy by 2030,” he said.

Currently, the VFEX is 100 percent owned by the ZSE, and in the long run, there are plans to bring a technical partner in the form of an international exchange or international fund manager.

Companies listing on the VFEX will be able to raise capital in hard currency.

The US dollar exchange has three listings since it was established last year.

Said Finance and Economic Development Minister Professor Mthuli Ncube:

“Such milestones are indeed commendable and this shows the response to the incentives that the Government has put in place to support capital markets.

“The recently introduced incremental export retention scheme has been instrumental in getting the likes of Padenga and Caledonia to consider listing on the VFEX.

“These are win-win scenarios where the Government provides incentives that also result in increased production and foreign currency earnings for the country.”

Source: President launches Victoria Falls Stock Exchange (02/12/21)

Vic Falls Stock Exchange launched

 THE Victoria Falls Stock Exchange (VFEX) has been launched, kick starting the operationalisation of the Victoria Falls Special Economic Zone.

As a core activity, VFEX, will provide a gateway for companies in Zimbabwe, SADC, and the rest of Sub-Saharan Africa to raise capital in foreign currency. It will also provide investors to trade in the secondary market in hard currency. This means all global companies invested in Zimbabwe can now seek a listing on VFEX.

The launch of VFEX is one of the strategic initiatives being implemented by Government to stabilise the economy and attract foreign direct investment as building blocks towards a middle-income economy by 2030. The resort town of Victoria Falls was designated as a hub for tourism and financial services under the special economic zones initiative with a view of attracting tourists as well as luring investment through tourism. VFEX, a subsidiary of the Zimbabwe Stock Exchange (ZSE), will trade solely in foreign currency and mainly targets the mining sector in Zimbabwe and Africa as a whole. The new trading platform is also expected to help reduce foreign currency and settlement risks facing the economy.

“The establishment of this exchange today marks the beginning in earnest of our journey towards the establishment of an Offshore Financial Services Centre in Victoria Falls,” said Finance and Economic Development Minister, Professor Mthuli Ncube in his keynote address yesterday.

“The move will go down as the laying of the foundation stone of the Offshore Financial Service Centre and thus is a key pillar supporting efforts to grow Victoria Falls’ status as not just a special economic zone but an offshore financial hub.

“The launch of VFEX will therefore kick start the Victoria Falls Special Economic Zone.”

Prof Ncube, who was accompanied by Cabinet ministers Dr Sekai Nzenza (Industry and Commerce), Winston Chitando (Mines and Mining Development) and Deputy Finance Minister Clemence Chiduwa, told stock market and financial experts, tourism and industry executives, among other business leaders who witnessed the launch that VFEX would be a game changer in the trading of securities in the country as well as a conduit for portfolio investments and foreign direct investment in the rest of Africa in hard currency.

“This will reduce foreign currency and settlement risk for our international investors. The launch of VFEX will also deal with exchange rate risk from portfolio investment into the country,” said Prof Ncube.

“As the Government of Zimbabwe, we saw an opportunity to work with the ZSE in creating a global platform for the trading of stocks in foreign currency, and to do it in a way that promotes foreign investment into Zimbabwe and the region.”

VFEX will begin official trading of Seed Co International shares on Monday next week with more companies to follow. Prof Ncube called on other

counters listed on ZSE to have a listing on VFEX to enable them to also obtain funding to retool and expand their operations.

The concept of offshore financial centres is common in other countries. Globally, such centres are found in Ireland, the Caribbean, Luxembourg, Singapore, Hong Kong and the Netherlands, and in Africa, Mauritius stands out as an offshore financial centre.

Investors and issuers on the VFEX platform are set to benefit from several fiscal and non-fiscal incentives that have been approved by the Treasury. These include lower taxes ( 5 percent dividend withholding tax — for foreign investors only — and exemption from capital gains withholding) and reduced exchange control restrictions.

“The tax incentives will significantly create confidence in the operation of the offshore financing centre and attract capital from across the globe,” said Prof Ncube.

“Foreign investment is required to close funding gaps required to grow our economy. As part of the global picture, VFEX is also expected to offer pension funds an opportunity to invest in foreign currency denominated securities, enhancing the ability of pension funds to diversify currency risks and therefore grow sustainable value for pension funds assets.”

Government first approved the implementation of an offshore financial hub in Victoria Falls in 2012 before it had even approved the establishment of the Special Economic Zones. Prof Ncube then tabled the initiative in the 2019 National Budget, highlighting Government’s intention to set up an Offshore Financial Services Centre (OFSC) as part of the efforts to further develop the financial services sector, through provision of opportunities for global investment.

“We are all here today, testament to the efforts being done by the Government of Zimbabwe, through the leadership of His Excellency, President Mnangagwa to transform the country to an upper middle income economy by 2030 (Vision 2030),” said Prof Ncube.

Cognisant of the expectations from the international community in terms of repatriation of investments, the minister said VFEX will be useful in restoring investor confidence in the capital markets.

ZSE board chair, Mrs Caroline Sandura, said the VFEX will be a game changer if given the necessary support.

“This is a milestone not only for us but for Zimbabwe as the establishment of VFEX is meant to kick-start establishment of an off-shore financial services centre in the country,” she said.

“The offshore financial services centre is meant to set Zimbabwe on the same competitive platform with the likes of Dubai International Financial Services centre and other international financial hubs.”

She also said VFEX will strengthen investor confidence in the local financial service sector and unlock funding for the productive sectors of the economy.

Securities and Exchange Commission of Zimbabwe (SECZ) chief executive officer, Mr Tafadzva Chinamo, said by trading in hard currency, VFEX will reduce investment risks and facilitate valuation of assets in hard currency.

“As a commission we are pleased when new players approach us with innovative ideas that align with our official mandate. VFEX has been set up to facilitate capital raising in hard currency, which is what some of our productive sectors are in need of at the moment,” he said.

Mr Chinamo said capital markets worldwide remain an important part of the financial ecosystem as they facilitate capital raising, reduce investment risks and provide information for investment decision making.

He commended the Government for coming up with VFEX in the midst of illegal sanctions imposed on the country, saying there is potential for a flourishing offshore financial services centre.

Source: Vic Falls Stock Exchange launched (23/10/20)