Zimbabwe’s capital markets, which have been confining investors to limited options as chronic challenges buffeting the imploding economy ate into companies’ earnings, has received a new lease of life following the conjoining of the Securities and Exchange Commission of Zimbabwe (SecZim) and the United Kingdom-funded Financial Sector Deepening Africa (FSD Africa).
SecZim joined FSD Africa flagship, Africa Regulator Support Programme, as part of a continent-wide initiative designed to support capital market regulators to attain international standards.
The initiative comes as SecZim has been finalising amendments to regulations that enhance investor protection by applying consistent principles to investing advisers and brokers, providing clear disclosures, exercising due care and addressing issues of conflict of interest.
At a time the country is struggling with liquidity crisis, the initiative is expected to broaden the long-term financing base of economy by addressing key challenges and enhancing governance through institutional reforms.
In an update, SecZim CE Tafadzwa Chinamo said the assistance from FSD Africa in kick-starting a ground-up rebuilding of Zimbabwe’s capital and securities industry could not have come at a better time.
“We have before cabinet amendments to the Securities Act which seek to remodel the capital market in line with international best practice. Such is the enormity of the amendments that implementing the regulatory changes implied by the proposed new laws will embrace a wider stakeholder base. It is for this reason the commission is excited by the assistance from FSD Africa and welcome the prospect of building our capital markets from a position of knowledge and inclusivity,” Chinamo said.
The programme is also expected to identify challenges and strengthen capital markets by improving regulation and compliance with international standards while supporting an institutional capacity assessment to review SecZim’s operations and identify areas that require strengthening.
It will also fund the development of a capital markets masterplan that will outline the actions needed to develop the capital market sector and broaden Zimbabwe’s long-term financing base as SecZim engages in knowledge-sharing with capital market regulators across Africa.
Zimbabwe has been looking at having a competitive and more attractive capital market.
Head of Office for the UK Department for International Development in Zimbabwe and South Africa, Annabel Gerry, sees the initiative unlocking a key source of long term financing for businesses that can drive robust and inclusive growth in Zimbabwe.
The two and a half year programme provides funding to build the capacity of capital market regulators across the continent, provide world-class technical assistance, encourage closer collaboration among regulators and conduct research to support the development of new policies and regulations.
SecZim is the eighth capital market regulator to join the programme, which began in September 2018.
FSD Africa is implementing the programme in Nigeria, Ghana, Uganda, Kenya, Mozambique, Rwanda and Zambia, as well as in the West African Monetary Union’s Regional Council for Public Savings and Financial Markets.
Zimbabwe requires a strong capital market to help it achieve a middle income status by 2030 with existing links between financial sophistication and economic growth.