Zimbabwe's ZSE: Mthuli Ncube Cuts Listing Costs Amid Delisting Wave

• The Zimbabwe government is working on measures to reduce listing costs on the ZSE.
• VFEX was launched in 2020 as a subsidiary of ZSE Holdings Limited, denominated in US dollars.
• Several companies have delisted from the ZSE due to high compliance costs and liquidity constraints.
• Minister Ncube believes that both the ZSE and VFEX can grow together successfully.

A growing number of companies have opted to delist from the Zimbabwe Stock Exchange (ZSE) in recent years, citing high compliance costs and liquidity constraints as major factors. National Foods, Innscor Africa, and Khayah Cement (formerly Lafarge Cement Zimbabwe) are among those that have already left the local bourse or are in the process of delisting. This trend has sparked concerns about the competitiveness of the ZSE, prompting the government to take action. Finance Minister Professor Mthuli Ncube has called on the ZSE management to submit proposals for reducing listing costs and making the exchange more attractive to investors.

The Victoria Falls Stock Exchange (VFEX), which was launched in 2020, operates as a subsidiary of ZSE Holdings Limited (the parent company of ZSE) and is denominated in United States dollars. Its primary role is to attract foreign direct investment by providing investors with greater protection from exchange-control risks and other incentives. Unlike the ZSE, VFEX offers a platform for companies seeking access to international capital and investors. Minister Ncube has emphasized that the two exchanges can coexist and grow together successfully.

The government is taking a broader approach to reforming Zimbabwe's capital markets, recognizing that multiple platforms are needed to cater to different categories of businesses and investors. The Zimbabwe Mercantile Exchange (ZMX), operated by Financial Securities Exchange (FINSEC), the Zimbabwe Entrepreneurship Exchange (ZEEX), and others are all part of this ecosystem. Minister Ncube has expressed his willingness to consider incentives that would enable these platforms to fulfill their respective mandates and support economic growth.

Lawyers advising clients on Zimbabwe listings should watch for potential changes to the cost structure of maintaining a listing on the ZSE, which could impact compliance costs and company valuations.

Source: Original reporting via AllAfrica Zimbabwe