Sikhulekelani Moyo, Business Reporter
CAPTAINS of industry and commerce have commended the impressive growth of the Victoria Falls Stock Exchange (VFEX), which continues to attract high-value counters, saying the young bourse has become a critical platform in widening capital inflows into the economy.
The Confederation of Zimbabwe Industries (CZI) has since rallied its members to invest in the bourse to benefit from its incentives, including being able to raise capital in foreign currency.
This comes at a time when the VFEX has registered an 18-fold jump in trade volumes to close 2022 at US$12 million compared to US$619 000 in the prior year.
The bourse experienced rapid growth in the last quarter of 2022 injecting much-needed confidence and cementing the country as a safe investment destination.
The USD-denominated VFEX is a subsidiary of the Zimbabwe Stock Exchange (ZSE) launched in 2020 as an off-shore financial services center.
Its main objective is to attract global capital and restore foreign investor confidence in Zimbabwe’s capital markets while helping companies raise capital in foreign currency.
Its establishment is largely expected to go a long way in buttressing the Victoria Falls Special Economic Zone.
VFEX is fast attracting listings as it offers a raft of incentives including tax exemptions on capital gains and the ability to repatriate funds from a country where foreign exchange is in short supply to attract global capital.
For instance, investors who participate in the VFEX benefit from the ability to move their capital and dividends in and out freely, low transaction costs, and tax incentives that include a five percent dividend withholding tax for foreign investors, as well as exemption from capital gains withholding tax for all investors and minimal currency risks.
In written responses CZI president, Mr Kurai Matsheza, said the creation of VFEX was a great idea that will help Zimbabwe in addressing some of the economic challenges related to raising capital for business expansion.
“Considering the forex challenges bedeviling our economy, the introduction of VFEX was a wonderful innovation,” he said.
“This obviously widens the capital flows and it’s easy to attract foreign direct investments. Entities that require United States dollar capital are encouraged to list on VFEX because there are numerous benefits.
“Some of the benefits of listing on VFEX include attraction of international capital, repatriation of dividends are easier, forex retention levels are better than for ordinary exporters operating in Zimbabwe and corporate tax rates are lower.”
Commenting on the same, Zimbabwe National Chamber of Commerce southern region chairperson, Mr Mackenzie Dongo, said VFEX was a place where international investors’ long-standing concerns of repatriation challenges have finally been addressed.
“To the companies listed on the VFEX, there are benefits where the money raised is not subjected to immediate liquidation and there are also tax benefits/incentives such as tax-free incentives on tax heads such as dividends and capital gains,” said Mr Dongo.
“We encourage more businesses to join VFEX and tap on the above-mentioned benefits.”
At its inception, skeptics were quick to claim the bourse would suffer a stillbirth citing a lack of perceived investor confidence.
Beginning with a single counter, SeedCo International in October 2019, VFEX has grown to list seven companies by December 2022, while several more have joined the queue after issuing notices to shareholders.
Others include Nedbank Zimbabwe, Caledonia Mining, Padenga Holdings, Simbisa Brands, Karo Mining, and Bindura Nickel Corporation.
Already, National Foods Holdings Limited, SeedCo Limited and Axia Corporation Limited boards have approved the migration to VFEX from ZSE. Financial services group GetBucks has also indicated plans to migrate to the VFEX