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[Updated] Finance Minister shares more details regarding Vic Falls Exchange

Mthuli Ncube shared the mid-term budget review yesterday and in it is a bunch of interesting updates and government’s plan to revive our ailing economy. One of the projects announced with intent to help government get its paws on foreign currency is the Victoria Falls Exchange (VFEX).

The securities exchange was launched to in order to attract critical offshore capital to the economy. Details of the VFEX have been shared to the public in tiny pieces and before yesterday’s budget review we knew the following;

  • VFEX will be managed by Zimbabwe Stock Exchange;
  • ZSE CEO Justin Bgoni suggested those dealing with VFEX will be subject to different rules when it comes to taxation and repatriation of funds i.e participants are likelier to get tax concesisons and it will be easier to move money out of the country;
  • The exchange will have listings mainly from the mining sector;
  • ZSE is working with the RBZ and the government on a framework for repatriation of funds for foreign investors;

What’s new?

In the 2020 mid-term budget, the Victoria Falls Exchange was referenced again and this time the following details were revealed;

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  • The VFEX will thus be operated from the central business district of Victoria Falls, and will seek to partner any exchanges or international investment banks;

In addition to this there is mention of “government incentives” which are not fully explained as follows:

  • Exemption from Corporate Income Tax for the VFSE;
  • Exemption from Capital Gains Withholding Tax on disposal of shares listed on the VFSE; and;
  • A lower rate of 5% on dividends payable to non-resident investors on the VFSE.

Where will the confidence come from?

Following the announcement of the VFEX I wrote the following;

…Zimbabwe ranks poorly in terms of ease of doing business and the failure to reform laws in this field and non-existent adherence to the rule of law doesn’t seem like an attractive formula when it comes to attracting money to a country.

Following the targeted persecution of Old Mutual and the Zimbabwe Stock Exchange by government officials over the past month – I doubt investors will be clamouring over each other to list on the Victoria Falls Exchange. Why? Well, the government could wake up and decide that they are closing VFEX and that ease of repatriation investors were promised goes out of the window because an individual(s) has decided that your activity is disrupting the economy.


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