THIS week’s details of losses suffered by London-listed Cambria Africa through its investment in Old Mutual gave a glimpse into what happens if authorities pursue hostile policies. Problems started when the government, in the midst of a Zimbabwe Stock Exchange (ZSE) bull run mid-2020, sacked Old Mutual, PPC Cement and SeedCo from the bourse.
They became targets of a needless crackdown because radical elements in Zanu PF thought they were sabotaging markets by manipulating share prices, leveraging on the dual listings.
This was, of course, not true.
Zanu PF has always been uncomfortable with Old Mutual and PPC for decades and took the bull run as a pretext to show that they were in power. But economies and stock exchanges are ruled by market forces. Since the three counters were sacked and directed to seek listings on the Victoria Falls Stock Exchange (VFEX), many problems have surfaced.
There have been valuation problems that have affected investors and brokers. Insurance companies and pension funds with investments in Old Mutual have warned about these valuation problems, but government wants to have its way. It still insists that PPC and Old Mutual migrate to the VFEX. Zimbabwe prefers rule by force.
Investors may have kept quiet about such write-downs. But surely, they will never forgive Zimbabwe.
They might have packed their bags and left on realising that Zimbabwe’s radical politicians could pull the trigger anytime. If indeed the three firms manipulated share prices as claimed by government, it was surely out of the need to protect value not delinquency.
Who in their right senses would fold their hands and watch when values were eroded by an economic crisis inspired by bad political decisions. The Old Mutual implied rate, which was at the centre of the controversy, was not something that was relied on in dark corners of corporate boardrooms. It was, and remains above board.
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It is a reliable rate that volatile bourses can use.
It is the extensive looting and corruption by Zimbabwe’s elite that has destroyed the economy.
But it is easy to demonstrate that the three counters were acting in good faith. PPC also trades its stocks on the Johannesburg Securities Exchange (JSE), but it has never been accused of sabotage. Old Mutual is also listed of the JSE and London Stock Exchange, but it has never been accused of delinquency there.
Seed Co, which is quoted on the Botswana Stock Exchange operates across Africa on account of high levels of goodwill and excellent corporate governance practices. Surely, if they wanted, these big firms would play games in these richer markets and economies to make huge profits.
It is important to take a leaf from reports such as the one done by Cambria and make corrections. The Second Republic has promised to move away from missteps of the past, and surely, such disclosures must catch its attention. If President Emmerson Mnangagwa’s government is not moved by such reports, then nothing will move it.
The results would be disastrous.