ECONET Wireless' proposed voluntary delisting from the Zimbabwe Stock Exchange (ZSE), coupled with its strategic decision to list its newly formed infrastructure subsidiary on the Victoria Falls Stock Exchange (VFEX), is a profound development for Zimbabwe's capital markets.
This move highlights a growing trend where major corporations, particularly in telecommunications and infrastructure-heavy sectors, seek to escape persistent undervaluation and currency-related constraints perceived on the local bourse.
The creation of Econet InfraCo to house passive assets such as towers and real estate reflects a global pattern of infrastructure separation, but the choice to list it on a USD-denominated platform underscores a critical lack of confidence in the local currency trading environment.
The impact on the ZSE will be significant and multi-faceted. Beyond the immediate loss of trading volume and liquidity from one of its largest and most actively traded counters, the delisting sends a powerful symbolic message to the market.
It risks triggering a domino effect, where other similarly undervalued companies, especially those with tangible, internationally comparable assets, to begin to explore comparable exits or restructurings.
This erosion of the issuer base weakens the exchange’s diversity and appeal to both local and foreign investors, potentially stalling its development and deepening the valuation discount for remaining listed entities. Furthermore, it actively promotes the VFEX as the preferred venue for dollar-based investment, creating a competitive dynamic that could see the ZSE increasingly marginalised as a venue for smaller, local-currency-focused businesses, thereby cementing a two-tier financial ecosystem within the country.
To counteract this trend and retain its relevance, we urge the ZSE to undertake decisive and holistic reforms. A primary focus must be on resolving the fundamental issue of currency stability and convertibility.
This requires close collaboration with fiscal and monetary authorities to create a more predictable and accessible foreign exchange framework for investors.
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Concurrently, the ZSE itself can implement structural enhancements. Introducing market makers and easing regulatory frictions can directly improve liquidity. Offering tangible incentives, such as tax breaks on dividends from ZSE-listed shares or reduced listing and transaction fees, could make listing more attractive.
The exchange should also aggressively modernise its platform, embracing digital tools for investor engagement, improving the quality and timeliness of corporate disclosures, and actively marketing its listed companies to regional and international funds. Critically, the ZSE must move from a passive regulator to an active partner.
This involves proactive engagement with companies considering delisting to understand and address their specific grievances, and exploring innovative listing structures — such as dual-class shares or facilitating the listing of holding companies or specific asset divisions — to provide firms with the flexibility they seek without requiring a full exit.
Without such comprehensive and urgent action, the ZSE risks a gradual but steady decline as more companies follow Econet’s path in search of fair valuation and global capital. It should brace for a tumultuous future ahead.
