HARARE, Zimbabwe — The Zimbabwean government has scrapped a rule requiring investors on its main bourse to hold onto stocks for 180 days to avoid a higher capital gains tax. This decision follows the stabilization of the new local currency, the Zimbabwe Gold (ZiG).
The rule, in place since 2022, was originally introduced to curb speculation on the Zimbabwe Stock Exchange (ZSE). At that time, the ZSE was one of the few viable options for investors looking to hedge against the country’s rampant exchange-rate volatility and inflation. The previous currency, the Zimbabwean dollar, frequently depreciated against the US dollar, causing significant economic instability.
Since its introduction on April 8, the ZiG has appreciated by 0.5% against the US dollar, currently trading at 13.49, according to central bank data. The ZiG is Zimbabwe’s sixth attempt in 15 years to establish a stable local currency.
George Guvamatanga, Secretary for Finance and Economic Development, highlighted that the move is designed to bolster the capital markets and reflects the government’s confidence in restoring a market-driven economy.
“These are measures the government is taking to support the local currency, the ZiG, and reflect our strong confidence in the full restoration of a market-driven economy,” Guvamatanga stated. He also announced a reduction in the capital gains tax from 4% to 2%, with a further review scheduled in six months.
The Securities and Exchange Commission of Zimbabwe has been informed of these changes, aligning regulatory measures with the new economic strategy.
Justin Bgoni, CEO of the Zimbabwe Stock Exchange, welcomed the decision to eliminate the 180-day holding period. “It’s something the capital markets have wanted for a long time,” Bgoni said, expressing optimism that the change will enhance market liquidity and attract more investors.
The removal of the 180-day holding rule marks a significant step in Zimbabwe’s efforts to stabilize its financial markets and encourage investment. By demonstrating confidence in the new ZiG currency and reducing capital gains tax, the government aims to create a more dynamic and investor-friendly economic environment.
