HomeOpinionRaising capital for the public, private sector

Raising capital for the public, private sector

By Owen Mavengere

AT the recently ended annual Public Sector Convention hosted by the Institute of Chartered Accountants of Zimbabwe (Icaz), officials from the Securities and Exchange Commission (Secz) and the Zimbabwe Stock Exchange (ZSE) spoke to a very important topic of raising capital.

Their focus was slightly skewed toward the public sector, for good reason, but the discussion equally applies to the private sector.

Need for public sector funding

The public sector has been lacking in terms of investment for a while and the state of the infrastructure is testament to this fact. If you are going through this newspaper on the date of publication, chances are as you are reading this article you are experiencing load shedding.

Other examples include the state of our public hospitals, water supply system and so on.

I deliberately left out the roads because since Statutory Instrument 47 of 2021, which declared the roads as being a national disaster, we have seen efforts being made to try to repair them. The repair of the roads, and how the funding is being done will require a full article to discuss in full.

The public infrastructure desperately and urgently needs attention and this requires funding.

Funding is the elephant we ought to address, coupled with ethics and efficiency on the part of the public sector staff. Leaving out any one, especially funding will not yield desired results.

Funding and the private sector

This goes without saying; funding is a major requirement for the entities in the public sector. The target of 61% industry capacity utilisation will require funding for the purchase of critical machinery.

Of course there are other threats to that recovery which include power cuts, which as discussed already will require funding. All points of discussion gravitate back to funding.

Other parts of the private sector also have antiquated machinery that is not efficient, in terms of maintenance and running costs for example energy consumption, which again increases costs of production negatively, impacting consumers and our competitiveness in the region.

 Options for the public sector

The case for funding is straightforward and has been clearly spelt out for both public and private sectors.

Other writers have actually touched on the need for funding in greater detail.

Now to turn to the public sector, which I must confess is very dear to me, due to my work history and its impact on our lives every day.

According to Tinashe Mapara of ZSE, listing is a viable option for the public sector.

There are three products or instruments that can be listed which are equity, bonds and Real Estate Investment Trusts (REITs).


“Equity shares means shares, which are comprised in a company’s equity share capital. Equity, typically referred to as shareholders’ equity (or owners’ equity for privately held companies), which represents the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debt was paid off in the case of liquidation.”

The shares of State Owned Enterprises (SOEs) can be listed on any of the exchanges; either the local currency ZSE or the foreign currency denominated Victoria Falls Exchange (VFEX).

This will of course dilute the government’s holding, as a minimum of 30% must be held publicly, but will unlock value and keep the shareholding largely local if the shares are bought by local investors. Even the diaspora community can come in through the VFEX as well.

The major advantage would be the continued owning of our resources as a people with part of the equity held by the government and the remainder by everyday people and institutional investors.


“A bond is a fixed income instrument that represents a loan made by an investor to a borrower. The bond holder or investor receives coupon payments from the borrowing entity.”

This option does not result in the dilution of shareholding and thus control by the issuer and may be desirable in instances where the government cannot bear to lose its shareholding.

These bonds, if taken up by Zimbabwean investors will certainly have less caveats and costs than foreign investors who will be negatively influenced by Zimbabwe’s real and perceived risk.

Real Estate Investment Trusts (REITs)

“The structure of REITs in Zimbabwe is that of a Collective Investment Schemes. A real estate investment trust (REIT) is an entity that owns, operates or finances income-producing real estate. REITs provide an investment opportunity to investors. The REIT sells the units of the trust to investors and invests the proceeds in income generating properties.” This is another avenue which can further unlock value for the public sector through real estate.

Options for the private sector

Similarly, the private sector can make use of the above stated options. Naturally, this sector will be able to move fairly quicker as there are no concerns around needing to change legislation before listing, as is the case with some of the public sector entities whose enabling acts might prevent certain actions. Private sector will need at least:

  • A formal application for listing;
  • An explanation of the required spread of shareholders;
  • The proposed pre-listing statement;
  • The debenture trust deed, if debentures must be listed;
  • A notarial certified copy of the applicant’s certificate of registration; and
  • Board resolution.

Further details can be obtained from ZSE or Secz. The requirements are not a walk in the park, but not too cumbersome either, but just require commitment.

 Advantages of local funding

Raising capital through some of the options as above has some advantages which include:

  • Continued owning of our resources. As a country it is important that key resources remain owned by us, as owning and controlling means of production are a key step in escaping poverty. Assuming of course that local investors do take up equity in the entities.
  • Dilution of shareholding by the government will come with certain pros and cons, but ultimately, the accountability and transparency demanded from listed entities will help to improve efficiency and trust.
  • Key staff can also be attracted into the public sector, as currently some professionals seem to shun the sector. This will help bolster service delivery.
  • The diasporans, some of whom are keen to invest back home, will be afforded an opportunity to play a much larger role in the economy, beyond their current remittances which are mostly for consumptive expenses.
  • Overall business relations and perceptions will be improved for both public and private sector players.


Both public and private players must introspect on how to deal with the elephant in the room whilst taking in cognisance the practical aspects that come with the country’s external image.

The board must have oversight and ensure that public interest is protected and ethics are upheld during this and any other process carried out by any entity.

  • Mavengere is the technical manager at the Icaz, which is the largest and longest standing PAO in Zimbabwe, having been established on January 11, 1918, and is a body corporate incorporated under the Chartered Accountants Act (Chapter 27:02). Icaz provides leadership on the development, promotion and improvement of the accountancy profession focusing in the areas of accounting education, assurance, good governance practices and leadership and organisational excellence. — technical@icaz.org.zw or Twitter: @OwenMavengere.

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