TA Holdings Ltd and Masawara Ltd key shareholder Shingai Mutasa has called for the withdrawal of the United States and European Union (EU) imposed sanctions on Zimbabwe as the EU this week lifted travel restrictions on 35 blacklisted Zimbabweans.
The businessman — who becomes one of the first business leaders to remark on the emotive issue — told delegates attending a London Stock Exchange (LSE) symposium on financing options for local companies that economic embargoes on Zimbabwe were hurting capital raising initiatives for capital-short firms seeking offshore financing.
He said Masawara — which holds 40% stake in Joina City and 30% in diversified concern TA Holdings — nearly failed to list on the Alternative Investment Market (AIM) of the LSE and lost a cornerstone investor after a company linked to him was accused of having shareholding in a formerly blacklisted local bank.
Masawara, an investment company, eventually undertook an IPO last August raising US$25 million after legally defending the allegations.
On listing, it had a market capitalisation of US$50 million and this had grown by 8% to US$54 million this month.
Notwithstanding transactions cost of listing on AIM, which range between 7% and 10%, Mutasa added that Masawara’s listing helped the company acquire assets from Shell as well as the 50% stake in telecommunications firm, Teletrix.
He however said tight exchange control measures in Zimbabwe could frustrate companies seeking capital abroad. Listing a company on AIM according to exchange control regulations, is viewed as transferring Zimbabwean assets to a foreign country.
“The sanctions issue is very real. It’s not a fake issue, it is real,” Mutasa said.
“I personally think that the issue of sanctions is wrong. We shouldn’t be having sanctions in this country. It’s something that is an issue.”
The EU on Tuesday removed 35 people from the visa ban and asset freeze saying more human rights reforms were still needed in Zimbabwe.
“The EU has concluded that there has not yet been sufficient progress to justify a more substantial change of policy towards Zimbabwe,” reads a statement issued by the European bloc.
“We have therefore decided to extend by a period of one year the measures consisting of: a visa ban and asset freeze relating to a list of named individuals and businesses; an arms embargo and; other measures, taken within the context of Article 96 of the Cotonou Agreement.”
Zanu PF politicians however criticised the sanctions saying they were Europe’s bitter response to a controversial land reform exercise undertaken 10 years ago.
Mutasa said most local firms, currently struggling to raise capital on the ZSE, should consider listing on the LSE arguing that South African investors were cautious on investing in Zimbabwe.
The liquidity-tight environment prevailing on the market saw mining giant Rio Zim failing to raise US$40 million last year for recapitalisation while participation of rights issues on the ZSE was low.
Official figures show that the London Stock Exchange Group, which represents a third of Europe’s total market capitalisation, recorded trades averaging nearly US$3 billion daily on the LSEG’s markets. Last year US$1,25 billion was raised by African IPOs on the LSE.
Hwange Colliery, Old Mutual and PPC have dual listings on the JSE while Masawara and NMB are on the LSE.
“What we have realised is that South Africa is fundamentally a capital market for South African capital. The problem with that is they are very emotional around Zimbabwe and I think we have to be realistic (and know that) it is going to take them time before they understand the massive opportunity that sits in our country,” Mutasa said.
ZSE deputy chairman and veteran stockbroker Bart Mswaka said dual listings could stimulate activity on the US$4,2 billion local bourse. He said pension funds and fund managers which accounted for 80% of volumes on the market before dollarisation in February 2009 have been liquidating their portfolios to meet running expenses.
Foreign investors, also key drivers on the ZSE, continue to shy the local exchange amid indigenisation and empowerment fears.
Government gazetted regulations compelling foreign owned companies valued at US$500 000 or more to dispose 51% shareholding to black Zimbabweans within five years.
Last year, the Confederation of Zimbabwe Industries (CZI) congress resolved that sanctions were “inappropriate” and not in line with the “principles” of the inclusive government formed two years ago.
The CZI further agreed to “engage protagonists” to remove these sanctions.
Nearly 10 years ago, the EU imposed travel restrictions on several companies, President Robert Mugabe and his allies for alleged human rights abuses. The US congress in 2001 also passed the Zimbabwe Democratic and Economic Recovery Act, a law which restricts multilateral financial assistance to the Southern African Country.