‘Zim should reform capital markets’

By The Standard and Newsday | Jun. 15, 2014

HARARE — The Zimbabwe Stock Exchange (ZSE) has lost millions of dollars in potential investment to peer regional markets due to limited financial disclosures and poor corporate governance, finance minister Patrick Chinamasa said on Friday.

In a speech to delegates attending a forum on sustainable and responsible investment, Chinamasa said more reforms are required on the markets to attract more foreign investment on the local bourse.

Foreign investors currently account for more than 60% of trades of trades on the ZSE due to biting liquidity constraints.

“Poor corporate governance, lack of shareholder activism, unethical business practices, poor corporate reputation, failure of companies to embrace international best practice and poor corporate disclosure continue to make our markets less attractive resulting in investors turning to markets such as Johannesburg, Mauritius, Nairobi and Nigeria where corporate disclosure and governance practices are considered to be excellent,” Chinamasa said in a speech read on his behalf.

“As the government, we are working on creating an enabling environment that will make capital markets relatively more attractive to local, regional and international investors. To this end, the government has been reviewing the regulative legislation-the Securities Act as well as synchronising our policies in order to ensure clarity and consistency.”

Securities and Exchange Commission of Zimbabwe (SECZ) chief executive Tafadzwa Chinamo told the same forum that shareholder activism should be intensified on the domestic market to improve the level of executive accountability.

The capital markets regulator is currently reviewing ZSE listing requirements with more disclosures being at the heart of the reforms.

SECZ sees the automation of the bourse minimising inherent risks associated with the current paper-based trading platform.