VICTORIA FALLS – In recent years, a number of companies in Zimbabwe have chosen to delist from the Zimbabwe Stock Exchange (ZSE) and list instead on the Victoria Falls Stock Exchange (VFEX).
This trend has raised eyebrows among investors and financial analysts, who are keen to understand the motivations behind this move.
In this article, we explore why companies are delisting from ZSE to VFEX.
The Victoria Falls Stock Exchange (VFEX) is a relatively new entrant into the African stock market scene.
Launched in October 2020, it is a subsidiary of the Zimbabwe Stock Exchange (ZSE), and its mandate is to attract foreign capital into Zimbabwe.
VFEX is located in the resort town of Victoria Falls, which is a popular tourist destination in Southern Africa.
One of the main reasons why companies are delisting from ZSE to VFEX is the desire to access foreign capital.
Zimbabwe has been grappling with an acute shortage of foreign currency for many years, and this has affected the country’s economic growth.
VFEX provides a platform for companies to attract foreign investors who are interested in investing in Zimbabwe but are hesitant to do so through the traditional channels.
The VFEX has been designed to operate as an offshore financial services centre, and this allows companies to raise funds in foreign currency.
This is a major advantage for Zimbabwean companies, which have been struggling to access foreign currency due to the country’s challenging economic environment. Companies that list on VFEX can raise capital in currencies such as the US dollar, British pound, and Euro.
Zimbabwe based accountant and financial expert Tatenda Sibanda reminds us that the policies of VFEX strongly promote and endorse the use of multi-currency systems, particularly the USD, and provide tax incentives for listing.
“Ideally, the absence of capital gains tax on shares sold on the VFEX, coupled with protection against inflation and low transaction costs, makes it an attractive destination for both local and foreign investors seeking a secure and profitable investment opportunity,” he said.
Companies in Zimbabwe benefit from VFEX regulations?
Another reason why companies are delisting from ZSE to VFEX is the favorable regulatory environment. VFEX has been set up to provide a business-friendly regulatory framework that encourages investment.
The VFEX is governed by a different set of regulations compared to the ZSE, and this has created a more favourable investment climate.
For instance, companies that list on VFEX are not subject to the indigenization regulations that require foreign-owned companies to cede 51% of their shareholding to local investors.
In addition to the favourable regulatory environment, VFEX provides a more efficient and transparent trading platform.
The VFEX has adopted modern technologies, such as blockchain, to facilitate the trading of securities. This has led to a more efficient and transparent trading process, which has boosted investor confidence in the exchange.
In conclusion, the decision by companies to delist from the Zimbabwe Stock Exchange (ZSE) and list instead on the Victoria Falls Stock Exchange (VFEX) is driven by a desire to access foreign capital, favorable regulatory environment, and more efficient and transparent trading platform.
The VFEX has been set up to provide a business-friendly environment that encourages investment, and this has made it an attractive destination for companies looking to raise capital. With the potential to attract foreign investors, VFEX could play a critical role in Zimbabwe’s economic growth and development.
