Zimbabwe govt in talks with banks to support the new Victoria Falls Stock Exchange

Zimbabwe's government is in negotiations with international investment banks to support the launch of the new Victoria Falls Stock Exchange, which will exclusively trade in foreign currency. This initiative targets global capital markets, with a particular focus on the mining industry in Zimbabwe. Batanai Matsika, Head of Research at Morgan & Co, provided insights into the technical details and potential challenges of this new venture in an interview with CNBC Africa. The exchange aims to create a platform for Zimbabwean companies with operations in the country to raise capital through a free zone or offshore financial service center based in Victoria Falls. Matsika explained that the motivation behind establishing this new stock exchange stems from the decline in foreign direct investments in Zimbabwe, which dropped to $259 million in 2019. This figure is significantly lower when considering the funding needs of companies operating in the country. By trading exclusively in foreign currency, the Victoria Falls Stock Exchange aims to promote increased trading activity and investment in Zimbabwe. The current economic climate in Zimbabwe presents challenges such as high inflation rates and a lack of investor confidence. The existing Zimbabwe Stock Exchange has witnessed investors exiting the market due to various uncertainties, resulting in decreased market capitalization and trading volumes. The government's decision to launch an alternative stock exchange demonstrates a commitment to address these challenges and attract foreign investments needed to support the country's economy. Despite skepticism surrounding the efficacy of new policies and regulations implemented by the government, Matsika expressed optimism about the potential of the Victoria Falls Stock Exchange. He emphasized the importance of building investor confidence, particularly among foreign investors who will be targeted by this offshore financial service center. Marketing efforts and regulatory frameworks will play a crucial role in reassuring investors and ensuring the success of the new exchange. The mining sector is expected to be a key focus of the Victoria Falls Stock Exchange, with interest already emerging from companies involved in Lithium and other mining activities. The government anticipates a positive response from the mining community, given the global investment platform's potential to attract capital and drive growth in the sector. In a thought-provoking remark, Matsika drew a comparison between Zimbabwe and Somalia, highlighting the divergent economic trajectories of the two countries. While Somalia has been praised for its commitment to openness and transparency, Zimbabwe faces challenges related to political instability. Despite these obstacles, Matsika pointed out that Zimbabwe possesses essential drivers of economic growth, such as infrastructure and human capital, which could support investment opportunities in the country. The launch of the Victoria Falls Stock Exchange represents a strategic move by the Zimbabwean government to attract foreign investors and stimulate economic growth. By creating a dedicated platform for trading in foreign currency, the exchange aims to address the funding needs of local companies and promote investor confidence in Zimbabwe's market. While challenges remain, particularly in the realm of policy and political stability, the initiative signals a commitment to fostering economic development and attracting international capital to the country.