ZIMBABWE can tap into offshore funds invested by pension funds since 2011 if the proposed re-launch of the debt market is finalised. The Zimbabwe Stock Exchange believes the time is ripe for a securities market comeback and is currently in discussion with the Securities Commission of Zimbabwe regarding a pricing framework for the debt market and is awaiting regulatory approval for revised the listings requirements for the Debt Market.
Currently, there is a prescribed assets’ shortage, according to ZSE chief executive officer Mr Alban Chirume. He said as the Zimbabwean markets evolved, equities took over . . . “and today we have a market that survives largely on trading equities”. “Current skew towards equities on ZSE excludes a significant portion of saving pools, among them international pension funds that naturally seek a home in long-term fixed return instruments,” said Mr Chirume.
He was presenting a paper on “Reviving the Debt Market in Zimbabwe” at a ZSE workshop on the debt market. “ZSE believes that the environment is ripe for the re-launch of the debt market as appetite from issuers and investors is high. Several successful fixed income issues have been done in the multi-currency regime. Some of the bonds issued include: CBZ’s $20 million bond issue in 2012 to finance infrastructure development; IDBZ’s $30 million issue in 2012, to finance procurement of pre-paid metres and ZSE’s $1,5 million issue in 2013 to fund the Automated Trading System,” said Mr Chirume.
Pension Funds were allowed to invest 15 percent of their funds into offshore investments in 2011 and the Zimbabwe Stock Exchange believes that resuscitating the debt market could allow investors mobilise some of the resources whilst offering investors with alternative investment products.
The ZSE proposed that all Government and parastatal bonds be listed on the ZSE, which the Minister of Finance and Economic Development Patrick Chinamasa granted in his 2015 Mid-Term Fiscal Policy review. The bourse consulted widely on the listings and the pricing frameworks– input was received from Insurance Pension Commission, Zimbabwe Association of Pension Funds, Public Accountants and Auditors Board, stockbrokers, asset managers, potential issuers and financial advisors.
According to the June 2015 RBZ monthly report, commercial banks and building societies, held on their balance sheets treasury bills worth $810 million. IPEC statistics as at the end of August 2015 indicated that bonds with prescribed assets status worth $437,8 million were in issue. “The combined statistics show that the fixed income market in Zimbabwe is already north of $1,2 billion, and can grow with the revival of the regulated ZSE trading platform,” he said.
According to a World Bank 2012 report Zimbabwe requires approximately $33 billion in the next two decades which translates to at least $1,65 billion each year, for infrastructure development.