THE Competition and Tariff Commission (CTC) stirred a hornet's nest last week with an advisory stating that share acquisitions through Zimbabwe's stock exchanges are not automatically exempt from the merger notification requirements of the Competition Act.
The commission said any acquisition conferring a controlling interest is subject to review where the parties' combined annual turnover meets or exceeds the US$1.2 million threshold.
The guidance has unsettled capital markets, prompting an urgent meeting between the CTC and the Zimbabwe Stock Exchange (ZSE).
For many investors, the timing could hardly be worse. It risks reinforcing a perception of regulatory overreach at a time when Zimbabwe is working to restore confidence in its financial markets.
Memories remain fresh of the six-year dispute that kept Old Mutual's shares suspended from trading — a reminder of how prolonged regulatory uncertainty can undermine investor confidence.
The CTC could have avoided much of the concern by first engaging the ZSE and the Securities and Exchange Commission of Zimbabwe (SECZ) before issuing its advisory. Consultation is not regulatory weakness; it is sound policymaking.
Capital markets run on confidence. It is the invisible currency that persuades investors to commit capital, companies to raise funds and economies to channel savings into productive investment. Once confidence is shaken, it rarely waits for clarification. It simply moves elsewhere.
The issue is not whether competition law should apply to listed companies. It should whenever transactions result in a genuine transfer of corporate control. The concern is that the advisory appears to blur the distinction between ordinary secondary market trading and acquisitions that fundamentally alter control of a business.
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Markets function best when rules are clear, predictable and consistently applied. Investors buying shares on the ZSE or the Victoria Falls Stock Exchange (VFEX) need certainty about the regulatory consequences of their trades. If every sizeable share purchase carries the risk of lengthy regulatory scrutiny — or worse, the possibility of being unwound — investors will inevitably become more cautious. Some will postpone investment decisions; others will simply deploy their capital elsewhere.
Zimbabwe can ill afford such uncertainty.
The country has spent years rebuilding its capital markets. The establishment of VFEX, reforms aimed at attracting foreign currency-denominated investment and efforts to deepen domestic capital markets all depend on one critical ingredient: regulatory certainty.
Competition regulation serves an essential purpose. It protects consumers and markets from excessive concentration and anti-competitive conduct. But it should remain focused on the transactions it was designed to regulate — mergers and acquisitions that materially change corporate control — not create the perception that routine stock market trading has become a regulatory minefield.
Public markets already operate within a comprehensive regulatory framework. Investors crossing significant shareholding thresholds must disclose their holdings, mandatory takeover provisions are triggered once prescribed ownership levels are reached, and securities regulators and stock exchanges continuously monitor trading activity. These safeguards exist because listed companies differ fundamentally from private transactions.
Zimbabwe also needs more institutional capital, not less. Pension funds, insurers, offshore portfolio investors and private equity firms all place a premium on regulatory certainty. They accept market risk because price movements are part of investing. What they are far less willing to tolerate is regulatory ambiguity.
Capital is highly mobile. Investors comparing opportunities across Africa will not favour jurisdictions where compliance obligations are unclear, or where routine investment decisions may unexpectedly trigger lengthy administrative processes.
The forthcoming meeting between the CTC and the ZSE presents an opportunity to restore confidence. Regulators should clearly distinguish between passive portfolio investment and acquisitions that genuinely transfer corporate control. Such clarity would strengthen both competition policy and investor confidence.
Policymakers should also recognise that Zimbabwe's capital markets have evolved significantly since the current merger notification threshold was introduced. A threshold designed for a much smaller market may no longer reflect today's realities. If reform is necessary, Parliament is the appropriate forum, through the proposed Competition Amendment Bill, where thresholds and procedures can be reviewed transparently after meaningful consultation with market participants.
Strong regulation and vibrant capital markets are not competing objectives — they reinforce one another. The most effective regulators build confidence by ensuring market participants understand the rules before they invest, not after they have traded.
Capital markets do not run on speculation. They run on confidence. Protecting that confidence should remain every regulator's foremost responsibility.
