ZSE suspension going to backfire

IN remarks that have startled economic players, Finance minister Mthuli Ncube this week likened the suspension of the Zimbabwe Stock Exchange (ZSE) to a harmless “long holiday”.

His reasoning was that the bourse does not operate on weekends and holidays, and that this has never harmed investment in any way. Similarly, he argues, stockbrokers must simply tell investors that their investment is safe despite the suspension of trade on the stock market.

Ncube made the remarks during a post-cabinet briefing on Tuesday. It is an understatement to say his utterances were astonishing.

We find it shocking that the minister, a professor of economics who has vast experience on the international stage, can make such a reckless statement.
The suspension of trade on the ZSE is no laughing matter. It will have devastating consequences for Zimbabwe’s image as an investment destination.
The government’s mantra that “Zimbabwe is open for business” will not be taken seriously by investors.

When Ncube was appointed minister with powers to preside over Treasury, there was much excitement over a man touted as a game-changing “technocrat”. What has happened on the way to heaven?

Suspension of the ZSE will worsen the country’s high-risk investment profile.

It defies logic that officials can base their rash actions on what appears to be a jittery aversion to the Old Mutual Implied Rate. As the name suggests, the rate is implied and not formal. It is merely a loose comparison of the future cost of goods and services, based on the insurance company’s share prices in Harare, Johannesburg and London.

When one of President Emmerson Mnangagwa’s advisers first levelled false allegations of impropriety against Old Mutual Ltd, most level-headed Zimbabweans dismissed the accusation as laughable claptrap. It beggars belief that the authorities were actually taking the conspiracy theories seriously.

There is a reason why economic analysts emphasise the importance of policy certainty. The actions of policymakers must not only be predictable but also devoid of knee-jerk inclinations. Arbitrary moves make it difficult for investors to plan their businesses in a manner that delivers the best return on investment.

Rash actions are bound to spook investors.

We have to remember that Zimbabwe is competing with other countries for limited investment. A country that shows a pragmatic commitment to policy coherence and certainty will enjoy an upper hand over a country rocked by mayhem. Business confidence takes a battering in an environment characterised by policy chaos.
Suspending the ZSE will not address the fundamental frailties at the heart of the Zimbabwean economy. If anything, it will dim the few remaining flickers of hope.

The economic and political reform agenda remains derailed. It is only through genuine far-reaching reforms that a firm foundation can be built for investment promotion, economic stability and post-Covid-19 recovery.

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