THE Zimbabwe Stock Exchange (ZSE) is awaiting final approval from Securities and Exchange Commission of Zimbabwe (SECZ) to establish a junior bourse for the small-to-medium enterprises, an executive has said.
BY TATIRA ZWINOIRA
ZSE wants to establish the Zimbabwe Emerging Enterprise Market (ZEEM) where companies that cannot meet the capital requirements on the main bourse could list and raise capital.
ZSE chief executive officer Alban Chirume told NewsDay in emailed responses that ZEEM was a good platform for SMEs to source investment at a time when the SMEs sector was contributing a significant amount to the gross domestic product.
“The ZSE awaits regulatory approval of the ZEEM listings requirements (“rules”). Once approval is obtained, the rules will be forwarded to the Ministry of Finance and Economic Development to facilitate the gazetting process which precedes the launch of the market. Once ZEEM is launched, the SMEs which do not qualify for listing initially can also benefit from the product’s existence,” Chirume said.
“ZEEM will provide the aforementioned SMEs with a template, which they can follow in order for them to also qualify to be listed on the Board at some stage. Part of that preparation is to ensure that the SME are not only formalised but have the relevant paperwork and financial records in place and have a long term business strategy that can appeal to investors.”
The rules to list on ZEEM requires each applicant to have at least $250 000 (but not exceed $9,99 million) in share capital and provide audited financials for at least one financial period prior to listing.
SME companies will also be required to have a minimum of 50 public shareholders, achieve at least 26% public shareholding and appoint a designated advisor.
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Efforts to establish ZEEM, which was supposed to be set up sooner have been hindered by the low performing economic activity and investment both locally and internationally.
This came as the mid-term fiscal policy revealed the main bourse has experienced a 34% decline in market capitalisation since January 2015, a reflection of the contraction of the economy, which weakened share prices.
“Foreign investor participation on the Stock Exchange declined, as reflected by an increase in net outflows of $1,1 million and $15,4 million in the first quarter of 2015 and that of 2016, respectively,” Finance minister Patrick Chinamasa said in the mid-term fiscal policy.
Analysts say the bourse was seeing subdued trading, disinvestment by mainly foreign investors, and weak local investment, also led to value erosion on the Zimbabwe Stock Exchange.
Discussions to speed up the creation ZEEM come as a time when the ZSE experienced its worst daily turnover rate in seven years of just $105 in July.
The total value of trades was $89,29 million in the first half of the year down from $137,73 million recorded in the same period in 2015.
