New bourse on the cards

THE Indigenisation ministry, in collaboration with private sector partners, is planning to set up a second stock market in Zimbabwe, which will trade in shares from the indigenisation fund.

Report by Staff Writer
Youth Development, Indigenisation and Empowerment minister Saviour Kasukuwere told businessdigest this week the shares would be listed under an Indigenisation Index (Indigedex) but the modalities of how this would be structured were still being worked out.

 
He said indigenisation was a technical process which required intricate planning to avoid a haphazard approach. The move to set up a stock exchange would afford everyone a chance to participate in the empowerment programme, Kasukuwere said.

 
The plan to set up the Indigedex comes at a time when government has called on all mining companies to primarily list on the Zimbabwe Stock Exchange.  Government believes such an arrangement would ensure capital yielded from mining activities would help to ease liquidity challenges in the market.
Currently, there are only two foreign mining firms listed on the ZSE — BNC and Falcon Gold.

 
Major mining firms such as Zimbabwe Platinum Holdings (Zimplats) and Caledonia Mining Corporation (which operates the Blanket Gold Mine) are listed on the Australian Stock Exchange and Toronto Stock Exchange, respectively.

 
According to the Securities Act, the Securities Commission can license as many exchanges as feasible, as long as the bourses comply with the requirements that are stated under Section 29-37 of the Act.

 
Zimbabwe has lagged behind over the development of its capital markets, with plans to open a commodities exchange and a secondary bourse for small-to-medium enterprises being on the cards for donkey’s years.

 
Analysts say that the move to create a second stock market would initially generate excitement, but that will soon fizzle out as Zimbabwe has a small market, with the ZSE trading in negative territory owing to weak investor sentiment.

 
Kasukuwere also said his ministry would soon be launching workers’ share participation schemes in the banking sector. Under the scheme, employees would own upward of 10% of the banks they worked for. He said the move, to be implemented by foreign-owned banks, was in line with the indigenisation requirements.

 
The indigenisation minister said  the raising of the minimum capital requirements of banks to US$100 million for commercial and merchant banks would not affect the indigenisation programme because according to the law, foreign-owned companies have to comply.

 
Under Zimbabwe’s indigenisation and empowerment plan, in which Kasukuwere has been at the forefront, foreign-owned companies are expected to dispose of 51% of their shareholding to locals. For mining companies, part of the 51% stake is supposed to go to employees as well as communities within which the mining companies operate.

 
Most mining companies in Zimbabwe have already complied with the indigenisation requirements. Under the generally opaque distribution, shares not allocated to communities and employee trusts have either been taken up by “private” investors or placed into the National Indigenisation and Economic Empowerment Fund (NIEEF).

 
Initially, the stakes that now fall under the NIEEF, were supposed to have been housed under a sovereign wealth fund, but there were disagreements over who would administer the fund, whose actual existence was also questionable.
The ministers of Finance and Economic Planning argue the Indigenisation ministry was not representative and hence could not administer the fund, which would hold state resources.