GOVERNMENT is set to hold a crucial meeting with Old Mutual over the standoff between the two parties in which the largest financial services company has been accused of stoking currency volatility on the parallel market.
The meeting is being held for the authorities and Old Mutual to come to an understanding and chart the way forward.
Old Mutual is accused by the government of contributing to the weakening of the local currency through the Old Mutual Implied Rate (OMIR), one of the few gauges of Zimbabwe’s exchange rate through comparing the price of the financial services company’s shares in the United Kingdom, South Africa and locally.
Finance minister Mthuli Ncube suspended the fungibility of Old Mutual, Seed Co and PPC shares for a period of 12 months in March this year.
The government also suspended trading on the Zimbabwe Stock Exchange (ZSE) last month to investigate what it called illicit activities on the local bourse.
Zanu PF has recommended that Old Mutual be delisted from the stock market and be listed on a foreign currency-denominated bourse that will be set up by the government.
Well-placed sources revealed that government officials, who include Ncube and his permanent secretary George Guvamatanga, will meet Old Mutual executives on Monday. Representatives of the Securities and Exchange Commission and the ZSE will also attend the meeting.
“The meeting will set up a final roadmap for the listing of Old Mutual on the local bourse,” a source revealed last night.
“Several options will be tabled for discussion at the meeting. These include Old Mutual listing on the Victoria Falls Stock Exchange to be set up by government in which trading will be in foreign currency and the option of Old Mutual continuing to trade on the local bourse, but under certain conditions. However, I must stress that kicking them out of the Zimbabwe market is not an option.”
During a webinar this week, Ncube said government will allow resumption of trading on the ZSE only after investigations by the Financial Intelligence Unit on allegations that led to the suspension of the bourse are concluded, estimating that it might take a week or two.
A senior government official said trading should start within the next two weeks.
The suspension of trading on the local stock market has been damaging to the economy.
South African money manager Allan Gray slashed the valuations of Zimbabwean stocks in its African fund by 45% as a result of the suspended trading.
The ZSE platform carries daily transactions of more than ZW$10 million which means at least ZW$190 million in transactions has been lost during the suspension.
Meanwhile in a related development, the other audit based on dealings on the Econet mobile platform, Ecocash is expected to take six weeks.
The investigation is being conducted by an international audit firm.
“The opening of the ZSE doesn’t depend on the Ecocash issue. Unless the audit finds otherwise,” an insider revealed.