The Government is planning to establish a special purpose vehicle (SPV), the Mosi Oa Tunya Development Company (Mosi), to increase investments into the country’s premier tourist destination – Victoria Falls.
This comes as the Zimbabwe Stock Exchange (ZSE) has also started the process to establish the Victoria Falls Exchange (VFEX), as the Government doubles efforts to attract foreign investment into the country.
According to the National Tourism Recovery and Growth Strategy (2020 – 2025), the SPV will be housed under the Ministry of Environment, Climate, Tourism and Hospitality Industry.
“Mosi Oa Tunya Development Company (Mosi) is a special purpose vehicle under the Ministry of Environment, Climate, Tourism and Hospitality Industry. It is a public investment vehicle for the Government in the development of tourism in Victoria Falls,” reads part of the strategy document.
“The company will spearhead tourism infrastructure development in Masuwe Estate in Victoria Falls in partnership with relevant Government ministries and agencies and private sector partnership.
“Work is underway to develop a comprehensive area development plan for Victoria Falls to unlock investment potential in the Victoria Falls Special Economic Zone.”
The Government has also announced plans to turn Victoria Falls into an international finance centre.
And plans are afoot to set up the country’s first US dollar denominated bourse in the resort town – VFEX.
The ZSE has already set the ball rolling after inviting stakeholders interested in participating on the planned bourse to submit applications for expressions of interest.
The VFEX, a wholly owned subsidiary of the ZSE, is currently awaiting licencing by the Securities and Exchange Commission of Zimbabwe (SECZ), the regulator of all securities trading in the country.
Eligible stakeholders included security dealing firms licensed by SECZ as well as securities dealers, accounting companies, banks, legal practitioners and investment advisors.
The invitation by ZSE also entails securities transfer and investment management firms licensed by the SECZ willing to offer services on VFEX.
Zimbabwe recently gazetted regulations that provide the legal basis for the establishment and operation of the VFEX.
Finance Minister and Economic Development Minister Mthuli Ncube said the global securities exchange, VFEX, will seek partnerships with other global exchanges and partners around the world to become a truly global platform.
Statutory Instrument (SI) 196 of 2020, Exchange Control (Special Provisions for Securities Listed on Victoria Falls Stock Exchange) Regulations, 2020, is the legal instrument that provides for the establishment of VFEX.
Securities listed on the Victoria Falls Stock Exchange shall be tradable and settled solely in US dollars or alternatively any other convertible currency.
A company resident in Zimbabwe or listed on the Zimbabwe Stock Exchange may list on VFEX not more than 20 percent of its capital at any time on the ZSE.
Similarly, a company that is Zimbabwean resident, but not listed on ZSE can list on VFEX if the capital raised by the company on the exchange is from an offshore source or from free funds.
Additionally, such entity be required to reinvest at least 20 percent of the capital in Zimbabwe no later than five years from the date such funds are raised.
Further, provided that any capital raised on the planned securities exchange is obtained from an offshore source or from free funds, a company that is not resident in Zimbabwe may list on the VFEX.
Non-resident companies may also list on VFEX if they de-listed from the ZSE five years preceding its listing on the new market and if they will reinvest or employ in Zimbabwe 20 percent of the capital raised on VFEX no later than five years from the date the capital was raised.
Zimbabwe has suffered from foreign-currency shortages for years, which have hammered its economy. Gross domestic product contracted 8,3 percent last year and will slump another 7,4 percent in 2020, according to the International Monetary Fund.
The flow of FDI through the VFEX, which will diffuse some of the perceived risk in the mainland stock market, may help drive the process of rebuilding the battered economy, which has suffered a combination of poor policies in the past and the devastating impact of Western sanctions.
Last year, Zimbabwe’s tourist arrivals registered an 11 percent decline from 2 579 974 to 2 294 259 and tourism receipts also declined from US$1,386 billion to US$1,247 billion over the same period.
However, the revival strategy, that also recognises the role of domestic tourism, is likely to see figures rising.