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The Securities and Exchange Commission of Zimbabwe (SecZim) has said it is working to make sure that capital markets play a significant role in the economy.
This emerged at the SecZim Media Training Workshop in Harare today where it emerged that a capital market is a market where two main commodities are sold – equities or debt instruments.
Addressing journalists, George Nhepera, the SecZim Supervision and Surveillance Officer, said as of now, at 16.9%, from an economic perspective, Zimbabwe is sitting on a low financial GDP.
“So we need to find out a way, how to increase financial GDP. It means, from a mathematical point of view, we need to increase our listed firms on the Zimbabwean Stock Exchange. We need to have more firms on our VFX. More firms mean we are growing in terms of financial GDP. The same applies if the same firms are also performing, it means we are growing in terms of our financial GDP.
“The role of capital markets becomes much more robust if we do more in terms of this type of thing. So, if we are already aware that our VFX has got plus or minus 30 firms, on our small business exchange, it has got plus or minus 40. So any kind of delisting, we get worried. Why? Because it collapses or affects our financial GDP. Any new listings, we are happy as SecZim, because it increases our financial GDP,” Nhepera said.
He said the unproductive operating environment in the country affected the capital market.
“So what key lesson are we learning there? It is that we need stable macroeconomic conditions for a bond market to thrive in our market. So you can see the effort by the government to establish a stable macroeconomic environment. It’s underpinned by the purpose of wanting to revive the bond market. Why? Because we need to come to financing that cannot come without a stable macroeconomic environment, which is characterized by low and stable inflation that’s the key takeaway.
“So I think the nexus for the relationship between a strong macroeconomic environment based on the bond or capital markets is important. The market cannot grow without a stable macroeconomic environment. So it’s our duty as a nation to strive towards a stable macroeconomic environment, which I think the minister is saying we are targeting inflation of plus or minus 3% on a market-to-market basis. But our target as a nation should be within plus or minus 3% annually. That’s what we’re fighting for in the region,” Nhepera added.
