Lack of capital or delayed availability of capital has been attributed to be the major cause for failure to implement development programmes. However, there is need to think outside the box and shift from traditional sources of accessing funds such as government subventions and bilateral borrowing arrangements and instead broaden the means through which quasi government institutions access capital.
Municipalities and other quasi government institutions can utilise the capital markets facilities to raise funding for projects.
This is not a new concept, other regulated (utility) companies in the region have been using the stock market to access public funds by issuance of either equity (IPOs and rights issue) or bonds (corporate or infrastructure) to finance their projects. Umeme of Uganda and KenGen of Kenya are cases at hand of utility companies that access capital through the capital market. These companies in addition to performing their core functions of power generation, transmission and distribution operate profitably enough to pay shareholders and bondholders in form of interests and dividends.
Raising capital through the stock market minimises the level of non-transparent transactions and provides for better, timely and efficiently priced funds.
FINSEC provides quasi government institutions and municipalities with a platform to raise capital for infrastructure development in an efficient, transparent and cost-effective way through instruments such as bonds. These bonds can be sold to both institutional and retail investors and can be for tenors and amounts as decided by the funding requirements that the issuer may have from time to time. The FINSEC platform covers the entire process from the Initial Public Offering of bonds (primary market) right through to the post-issue trading of the bonds (secondary market).
FINSEC provides a regulated market place with standard rules and a central settlement infrastructure operated by licensed custodians who will independently hold cash and securities ahead of each trade to facilitate uncompromised delivery and payment.
The FINSEC platform connects all licensed securities dealers in Zimbabwe who will be able to collect and post sell and purchase orders on an open board thereby allowing for automated real-time multilateral price discovery in the trading of the bonds.
Access to long term capital enables quasi government institutions to provide services to their clients. This will also make the clients more inclined to honour their rent and rates obligations. Moreso, by making bond subscriptions available to retail investors as well, quasi government institutions will promote the active participation of residents and other retail investors including those in the diaspora in the development of social amenities and other facilities. As stockholders in the city’s infrastructure, residents will be more responsible in the use and maintenance of such infrastructure.
The Financial Securities Exchange (FINSEC) is a Zimbabwe registered securities exchange and a member of the Escrow Group. The Escrow Group has interests in the financial services and technology sectors. Corpserve Registrars and Escrow Systems are the other members of the group.
For more information contact:
2nd Floor ZB Centre, Cnr Kwame Nkrumah and 1st Street
Tel: +263 4 758193
Email: info@finsec .co.zw