Government says the establishment of the Victoria Falls Stock Exchange (VFEX), which the Treasury has sugar-coated with a coterie of attractive incentives, will help draw increased foreign direct investment (FDI) into the country.
Finance and Economic Development Minister Professor Mthuli Ncube said apart from the range of peculiar incentives for investors listed on the VFEX, the Government put in place an insurance system for investors’ comfort.
Addressing the Chamber of Mines of Zimbabwe (CoMZ) annual general meeting (AGM) and conference at Elephant Hills Hotel in the resort town of Victoria Falls on Friday last week, the Minister said mining was capital intensive business.
As such, he said the incumbent Government was negotiating with a service provider, Chengetedzai Depository Company, for the installation of a depository system to enable investors to trade in and out of VFEX in a secure manner.
“The Victoria Falls Stock Exchange (VFEX) will be able to assist in attracting (foreign) investment into the country and into the region.
“There are lots of services that will be offered around it,” the finance minister told the delegates.
Investors listed on the relatively new stock exchange will be able to trade in foreign currency while the insurance scheme currently being negotiated will guarantee easier convertibility when investors trade in and out of the exchange.
Minister Ncube said the mining sector was critical to the achievement of objectives targeted under the National Development Strategy (NDS1), and Vision 2030, as such the Treasury would render it its full support.
Other peculiar incentives available to investors on the Victoria Falls stock market include exemption from certain taxes among them the capital gains tax, the withholding tax and lower corporate income tax.
The Government, through the 2019 National Budget Statement, announced its ambitious plans to establish an Offshore Financial Service Centre in the resort town of Victoria Falls in order to lure more FDI.
According to the Reserve Bank of Zimbabwe (RBZ,) FDI fell to US$71 million in the 2020 half year from US$116 million over the same period a year earlier.
FDI reached a post dollarisation high of US$750 million in 2018.
“The Victoria Falls Special Economic Zone has created an opportunity to set up the VFEX OFSC, as a subsidiary of Zimbabwe Stock Exchange (ZSE) main board,” Minister Ncube said.
The offshore financial services centre is similar to what is found in other global jurisdictions, for instance Mauritius, as well as in Ireland, the Caribbean, Luxembourg, Singapore, Hungary and the Netherlands.
He said foreign investment was required to close funding gas, as resources were needed to resuscitate targeted sectors of mining, tourism, agriculture (tobacco) and horticulture.