THE African Development Bank (AfDB) has raised doubts over the completion of the demutualisation exercise of the Zimbabwe Stock Exchange (ZSE) which has been on the cards for several years.
In its January 2013 Zimbabwe Monthly Economic Review, the regional bank said the slow process of demutualisation had resulted on the local bourse lagging behind other regional stock exchanges.
Demutualisation refers to a process by which a mutual organisation is transformed into a publicly traded firm. A mutual company is one that is owned by members for their benefit.
“It seems uncertain if the planned demutualisation of the Zimbabwe Stock Exchange would be completed in the first quarter of 2013 as was indicated in the 2013 National Budget Statement. Stockbrokers have challenged the right of Government to demutualize the ZSE,” reads part of the report.
The push to demutualise the exchange came after Finance minister Tendai Biti criticised stockbrokers for running the bourse like a “mafia organisation”.
AfDB said funding challenges had also derailed most of the programmes planned at the ZSE, which include automation.
“While it is one of the oldest stock exchanges in Africa and the second largest in Southern Africa, in terms of listings, the ZSE remains behind most stock exchanges in terms of infrastructure and technology,” AfDB said.
“This is unfavourable, particularly in view of the on-going regional integration strategies being undertaken by stock exchanges. In this regard, there is need for government to mobilise funding for the implementation of the various programmes if the ZSE is to attract more investors.”
Mobile phone operator Econet Wireless Zimbabwe last week said it was willing to extend a “no strings attached loan” to the ZSE to buy an electronic trading platform that allows immediate and transparent settlement, as in other countries such as South Africa and Kenya. The ZSE, despite being one of the oldest on the continent, is lagging in terms of automation.
Securities Commission of Zimbabwe chairperson Willia Bonyongwe recently said the ZSE board was working flat out to automate by mid-year.
“We expect it by mid-year notwithstanding the shareholder disputes. To us, automation and demutualisation are separate issues,” Bonyongwe said.
Automation of the local bourse is expected to bring transparency and vibrancy to the market.