eBusiness Weekly
Africa Moyo
The Securities and Exchanges Commission of Zimbabwe (SecZim) believes the economy’s inability to attract massive capital inflows, coupled with cash shortages are the major drivers of firms seeking foreign listings.
SecZim CEO Tafadzwa Chinamo said companies faced challenges accessing hard cash and making payments abroad to buy equipment and raw materials, and as such see foreign markets as a way out. “I think it comes down to our economy’s ability to raise capital for companies,” he told Business Weekly.
“If a company wants to raise money in this environment, and that capital is required in hard currency, even if they do a rights issue here, the challenges they are going to face are going to be getting that money out.”
“So I think from that point of view, it is understandable why a company says ‘if I am going to list outside this country and I raise hard currency, my chances of actually meeting my objectives are greater (than clinging on to the ZSE)’”, said Mr Chinamo.
ZSE acting CEO Mr Martin Matanda also told Business Weekly that companies list on multiple stock markets for various reasons, including expansion.
“We cannot speak for the company but it is certainly true that the world is now one global village. One of the major reasons for multiple listings is that it enhances the liquidity of an issuer. “Other markets may also have capital-raising products which are more suited to the company which may not be immediately available,” he said.
The World Bank and the International Monetary Fund (IMF) have continuously said that Zimbabwe has a high political risk profile which limits its ability to access loans at concessionary rates.
Zimbabwean companies seeking long-term funding for expansion are also struggling due to high interest rates of up to 12 percent. Micro-finance institutions charge upwards of 25 percent interest on loans. But Mr Chinamo does not believe the country risk profile is such a huge factor.
“Obviously, I think it (country risk) plays into it but really, it’s about the capacity of this market to raise that kind of money. I think we had an Econet rights issue last year, which was quite big — US$130 million.
“But even if we are saying companies want to raise capital, right now the same people who are expected to provide that capital — the pension funds, your NSSAs, Old Mutuals, all sort of players (are providing the money).
“Right now if a company wants to raise capital, they go to exactly the same people but the ordinary Zimbabwean who might contribute $100 or US$200 is not part of that equation. So that is the problem that is being faced (and) we are relying on outside markets to raise that capital,” said Mr Chinamo.
Mr Matanda said the ZSE has come up with a number of initiatives to “enhance the attractiveness of its platform”, including the introduction of an Automated Trading Platform in 2015, and the revival of a debt market.
“The Zimbabwe Stock Exchange is also on the verge of launching the Revised Listings Requirements for the Main Board and the Debt Market, which further enhance the ability of firms to raise capital in a manner which investors are comfortable with.”
