In a strategic move aimed at diversifying funding sources and bolstering the local sector, the Zimbabwe Stock Exchange (ZSE) has initiated discussions with the government to explore raising debt through capital markets.
A debt market, characterized by the issuance, listing, and trading of debt securities with a maturity period of one year or more, holds immense potential for Zimbabwe’s financial landscape. Instruments such as bonds, debentures, and notes form the backbone of this market.
Justin Bgoni, CEO of ZSE, highlighted the importance of government participation in kickstarting debt issuance through capital markets. He emphasized the pivotal role of the government as a trailblazer, setting benchmarks for interest rates and paving the way for private sector involvement. Bgoni expressed optimism, noting ongoing discussions with the government and anticipating progress in the coming weeks.
Bgoni outlined the potential benefits of government bond issuance, including establishing interest rate benchmarks across various tenors. Such initiatives provide clarity and stability for investors and businesses seeking long-term financing, thus stimulating economic growth.
Moreover, Bgoni addressed the critical infrastructure challenges exacerbated by the absence of a robust debt market. He underscored the role of debt markets in channeling funds towards long-term projects, essential for addressing Zimbabwe’s infrastructural deficits.
Anymore Taruvinga, CEO of the Securities and Exchange Commission of Zimbabwe, stressed the urgent need to revive skills and articulate tangible benefits for government participation in the debt market. Taruvinga highlighted the substantial volume of government domestic debt, estimated at US$3.4 billion by the African Development Bank, underscoring the potential for market development and investor participation.
During the Capital Markets Conference, Bgoni announced the establishment of the Bond Market Association of Zimbabwe (BMAZ) in collaboration with the Victoria Falls Stock Exchange and other market stakeholders. The association aims to promote market development, enhance transparency, and advocate for industry interests, thereby fostering investor confidence and participation.
The conference, themed “Fostering Zimbabwean Capital Markets for Sustainable and Responsible Investments: Opportunities for Investments,” attracted delegates from various sectors, including private enterprises, state-owned enterprises, stockbrokers, and pension fund trustees. The establishment of BMAZ and ongoing discussions between the ZSE and the government signal a promising future for Zimbabwe’s capital markets, poised for sustainable growth and responsible investment opportunities.
