HARARE – The Zimbabwe Stock Exchange (ZSE) is projecting a rise in its market capitalisation-to-GDP ratio to between 20% and 25% over the next five years, driven by anticipated economic reforms and renewed investor interest.
ZSE chief executive officer Justin Bgoni told businessdigest that achieving this range would position Zimbabwe closer to its regional counterparts, where market cap-to-GDP ratios often surpass 30%. He said Zimbabwe’s ratio has historically lagged behind other emerging markets but noted that with a stable economic recovery and structural reforms, the country could reach these new targets.
According to Bgoni, a critical sign of improved market health would be an increase in daily market turnover, ideally reaching between US$5 million and US$10 million. This would reflect more robust trading activity and greater engagement from both local and foreign investors.
He explained that several key factors would drive this growth, including regulatory improvements to ease investment processes, greater adoption of technology such as ZSE Direct, and broader efforts to educate and engage potential investors. Encouraging more companies to list, particularly from underrepresented sectors like technology, agriculture, and renewable energy, is also seen as essential. Bgoni further emphasised the importance of creating a favourable environment for foreign investors and attracting institutional capital through global partnerships.
Market analysts agree that by relaxing investment restrictions and offering incentives, Zimbabwe could create a more attractive climate for foreign direct investment, which would enhance liquidity and boost confidence in the market.
Recent performance data reflects ongoing challenges. The ZSE recorded a total market turnover of ZiG973 million in the first quarter of 2025, marking a 6.5% decline from the previous quarter. Total market capitalisation also dropped by 5.28% to ZiG64 billion. Nevertheless, foreign investor participation remained steady at 15.39%, suggesting a consistent level of international interest despite the hurdles.
Bgoni pointed to initiatives like the proposed Victoria Falls International Financial Centre (VFIFC) as important future growth drivers. He said the VFIFC would help attract institutional investors, private equity, and venture capital from around the world, creating a hub of financial expertise that Zimbabwe’s capital markets could leverage.
Another pressing issue identified was the rigid valuation of certain stocks, often pegged in US dollars, which discourages long-term investment. Bgoni advocated for stronger use of fundamental analysis in valuing companies, ensuring that stock prices more accurately reflect real business performance rather than fixed currency measures.
He also noted that the ZSE has been actively working to promote new listings, through initiatives like masterclasses and the Prospective Issuers’ Training Programme launched last year. In addition, the exchange has engaged the government in discussions about listing debt securities, which could diversify investment options and deepen the market.
Debt securities, which include instruments like bonds and notes, offer regular income and are typically attractive to more conservative investors seeking steady returns.
To further modernise its operations, the ZSE recently reduced its settlement cycle from T+3 to T+2, a move that became effective on April 14. This step is expected to improve market efficiency and align Zimbabwe more closely with international best practices.
Looking ahead, Bgoni said the ZSE will continue to focus on product innovation, expanding its investor outreach through roadshows, and maintaining dialogue with policymakers to ensure the market remains investor-friendly.
