HomeNewsEconet offer to rescue ZSE

Econet offer to rescue ZSE

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ZIMBABWE-LISTED telecommunication’s company Econet Wireless has offered to extend a “no-strings-attached” loan facility to the Zimbabwe Stock Exchange (ZSE) to purchase an electronic platform that will improve transparency on the local bourse.

Business Reporter

In a statement yesterday, the telecommunications company said this was in line with regional trends such as in South Africa and Kenya.
Trading on the ZSE remains manual as automation has taken longer than expected.

Econet called for urgent reforms of the share trading system of the ZSE saying the current system was “subject to abuse and perpetuates an elitist old boys clubs”.

“It is time for the Zimbabwe Stock Exchange to become more accessible to ordinary people and a proper vehicle for mobilising capital for companies,” Econet said.

Securities Commission of Zimbabwe chairperson Willia Bonyongwe last week told NewsDay the automation of ZSE would bring vibrancy to the bourse whose performance had not been improving since 2009.

“I believe the reason is a lot of people are not really confident to participate on the market currently for reasons ranging from past experience governance issues to do with the listed companies themselves,” she said. “There is tyranny of the minority by the majority shareholders.

“Other reasons have to do with the state of the listed companies. Very few have reasonable capacity and production. Automation will bring vibrancy as well as stringent corporate governance requirements,” Bonyongwe said.

“Obviously economic recovery will definitely increase aggregate demand and gross national savings available for investment.
“The new investment in mining and the Indigenous and Empowerment Sovereign Fund will add to the positive sentiments and increased market activity and consequently augment market capitalisation.”

Meanwhile, Econet said the company’s board had approved a share split of “10 to one”, to enable small investors to buy and sell shares in the company. A share split is when a company reduces the paid value of its shares and issues more shares in the same proportion.

At Tuesday’s closing price of $6,10, it means that any small investor would spend a minimum of $610 to buy 100 shares; after the share split, 100 shares will now cost only $61.

The decision by the board followed a study by the company, which showed that the shares were now so expensive that only foreign investors were now buying shares.

Officials say the level of foreign ownership in the company has shot up from a mere 10% at listing in 1998, to more than 30% today.

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