HARARE – Zimbabwe’s capital markets are undergoing significant transformation, with efforts to address low liquidity, regulatory hurdles, and economic instability paving the way for potential growth.
The introduction of the Zimbabwe Gold (ZiG) currency and initiatives to engage international creditors have set the stage for stability and expansion.
Market analysts believe that a strategic approach is necessary to stimulate the country’s capital markets in 2025. Business analyst Kudakwashe Mundowozi highlighted the importance of enhancing liquidity through new financial instruments, streamlining regulations, and implementing investor education programs. He also emphasised the need for sustainable investment promotion and a green financing framework to attract socially responsible investors in line with global trends.
Fostering public-private partnerships and encouraging foreign direct investment through policy stability and tax incentives are considered critical for long-term growth. By addressing these issues, Zimbabwe can build a more vibrant and resilient capital market.
The Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX) are seen as key platforms for driving investment and contributing to the country’s economic development. Investment analyst Enock Rukarwa noted that the introduction of ZiG had brought relative stability, shifting stock market activity from flat to a bullish trend in late 2024. However, he pointed out challenges such as the discontinuation of foreign currency settlements, which had briefly improved liquidity.
Liquidity, market depth, and size remain areas of concern, with analysts linking these variables to broader macroeconomic dynamics. Improved economic conditions, they argue, would boost confidence and activity in the stock market.
Financial analyst Malone Gwadu observed that ZSE served as a haven for investors during periods of volatility, particularly in early 2024, as a hedge against exchange rate losses. However, he identified inflation and exchange rate volatility as systemic threats to market confidence and growth.
To encourage market participation, Mr Mundowozi proposed tax incentives for companies listing on the ZSE, citing successful examples from Rwanda and Ireland. He also suggested adopting a fast-track listing process, similar to the Johannesburg Stock Exchange, to attract foreign companies and diversify the investor base.
Finance Minister Mthuli Ncube announced plans to further incentivise market activity on the VFEX, which has been hindered by low trading volumes. As part of the 2025 national budget, the Government will reduce capital gains withholding tax on marketable securities on the ZSE, effective January 1, 2025.
ZSE Chief Executive Justin Bgoni welcomed the tax reduction, stating it would increase liquidity, attract more investors, and enhance overall market efficiency. Lower taxes could also improve price discovery and make Zimbabwe’s investment landscape more appealing to foreign investors.
As these measures take shape, Zimbabwe’s capital markets are expected to play a pivotal role in driving economic growth and attracting both domestic and international investors in the coming years.
