HomeLocal NewsIn- Depth Interview: Chinamo relives terrifying ZSE closure

In- Depth Interview: Chinamo relives terrifying ZSE closure

Fact file: Tafadzwa Chinamo

  •  Educated at niversity of Zimbabwe BSc Gen (Maths and Statistics), University of Zimbabwe BSc Hons Statistics, Leeds Metropolitan University (MSc Leadership)
    Research Analyst Zimbabwe Development Bank (1993 – April 1997)
  • Joined Kingdom Asset Management in 1997 as Investment Analyst. Rose to fund anager, then managing director
  • Joined Zimnat Asset Management as Managing Director (June 2006 – May 2010)
    Securities and Exchange Commission of Zimbabwe – CEO (August 2011 – January 2022)
  • Chinamo is married to Rudairo. Blessed with two children, son Farai Nyasha (22) and daughter Rumbidzai Tendai (18).
  •  He is a devoted Catholic. Parishioner at Rhodesville Catholic Church (Greendale) since 1983.
  •  Leisure time Chinamo plays soccer and follows all sports. He does long walks with his pet.

AS a markets regulator, your worst nightmare would be the day the largest exchange under your purview is for one reason or another closed.

Indeed, outgoing Securities and Exchange Commission of Zimbabwe (SECZ) CEO Tafadzwa Chinamo (TC) confirms this to our chief business writer Taurai Mangudhla (TM), as he looks back at his decade at the capital markets regulator, sharing the highs and lows.

TM: When you joined SECZ, the institution was fairly new. Please tell us how you managed to build it into the institution that it is today?

TC: SECZ was born when the capital markets were already established.

The ZSE, for example, had been in operation since the 1890s.

To many in the industry the “regulatory framework” was functional and they didn’t see the need for change.

The establishment of the commission in 2009 meant repealing the Stock Exchange Act of 1974, which in the eyes of some was unnecessary.

As a result, there was resistance in some quarters of the SECZ’s authority.

My immediate task was to reach out to all industry players and establish a working relationship that was conducive to the development of the capital markets.

I guess the task was made easy.

Having worked in the industry, (I used) my familiarity with most of the players.

TM: What was your worst day in office or worst experience?

TC: My worst experience was the closure of the stock exchange in May 2020. More worrying was that this was not the first time.

During hyperinflation in 2008, the market was also closed on the grounds that it was fuelling parallel market forex trading.

Forex trading was at the centre of the 2020 closure as well.

With better collaboration of government, financial regulators and market players such episodes can be avoided in the future.

I am glad to say that through the Ministry of Finance inter-regulatory cooperation is improving and providing a forum for objective review and coordination.

The establishment of the Victoria Falls Stock Exchange (VFEX) will certainly remove forex issues from Zimbabwe Stock Exchange (ZSE) trading.

I am confident PPC and Old Mutual will resume trading soon.

TM: What was your best day in the office?

TC: Being accepted as an associate member of the (International Organisation of Securities Commissions) IOSCO, an association of organisations that regulate the world’s securities and futures markets.

This happened on December 24, 2022.

That was some Christmas present.

TM: What do you count as your best achievement?           

TC: Automating the market by moving away from paper driven manual systems to electronic platforms.

As the market regulator, we directed the market to adopt modern infrastructure.

We worked with market players to establish a Central Securities Depository (CSD), which was soon followed by automated trading on the stock exchange.

The CSD also made it easier for us to require that only licensed custodians be allowed to hold investors’ assets (cash and securities).

Previously, only large institutional investors generally used custodians.

Small and individual investors generally had their stockbrokers and asset managers do so.

The result was literary zero fraud, timely and accurate reporting to investors and much improved record keeping.

TM: If you could change one thing or decision you made in office what would it be?

TC: Denying the ZSE freedom to solve its depository needs.

Instead, we imposed one on them. By the time we licensed FINSEC we had learnt our lesson.

FINSEC has a well-functioning integrated system that handles trading (front office) and depository (back office).

TM: What’s your assessment of Zimbabwe’s capital markets, how deep and diverse are they and what can be done to improve the markets?

TC: The numbers speak for themselves.

In terms of market intermediaries, that is licenced players, we are doing ok.

We have enough players in all categories, namely brokers, exchanges, CSDs, asset managers and others.

On the product front, until recently we had a very narrow product offering.

I am glad to say that has changed. We, however, still do not have a vibrant fixed income market.

Our bond market is non-existent, which is a shame because without it our derivatives market cannot take off.

Also of concern is the negligible growth of institutional investors and those in the high-net worth category.

We have seen growth on the retail end, unit trusts and trading on the ZSE through C-Trade and ZSE Direct but very few big money clients are coming to the market. Several reasons could be attributable to this.

There is lack of confidence with securities and Zimbabwe dollar assets, self-management of assets and lack of marketing and development on the part of market participants.

To improve, market participants must invest much more in ICT systems and infrastructure. While the market, ZSE and CSD, have automated, very few of the players have invested in technology to capitalise on this.

As a result, interaction with potential clients/investors has not changed form and is unexciting to investors.

Lack of investment in ICT has also limited growth in product development.

TM: What’s the toughest decision you wish you didn’t have to make and why?

TC: Cancelling the licences of EFE Securities and Remo Stockbrokers.

It was an action that had to be taken, knowing beforehand it would affect the lives of many innocent people at these companies.

We also knew that we were going to endure long appeals and spend a lot of time in courts; which we did.

TM: You have been in office for the greater part of your career in a multiple currency system. Then the local dollar was reintroduced. In your opinion, has the coming of the local currency especially when foreign currency use was barred, affected the markets?

TC: Not really. Markets always price themselves accordingly and that’s what we have seen. Obviously one would have preferred a situation with a single currency.

TM: What factors are hindering growth of Zim capital markets?

TC: Lack of investment in ICT systems, high transaction costs, lack of confidence in the Zimbabwe dollar by investors, and high inflation, which means no bond market and derivative products.

TM: A job like yours is no easy task in Zimbabwe where there is a lot of political interference. What was your experience in this regard?

TC: Very little as a matter of fact.

I can’t remember a single day when my decision was subjected to political review or reversal.

I guess it’s a peculiarity of the capital markets compared to other government bodies.

TM: Any other issues that you wish you had before your term ended?

TC: There is always that one thing you never get to finish when you leave a job and for me it’s the court case CDC brought against the SECZ, ZSE and Ministry of Finance.

The commission has a perfect record in such matters.

So, I am not worried. Hopefully a court decision will put the matter to rest.

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