THE Bond Market Association of Zimbabwe (BMAZ) and the Botswana Bond Market Association (BBMA) have signed a memorandum of understanding (MOU) to strengthen the bond markets between Zimbabwe and Botswana.
A bond market is trading place where various debt instruments are sold by corporations and governments.
These debt instruments, known as bonds, are issued to raise debt capital to fund operations or seek growth opportunities and bond issuers promise to repay the original investment amount plus interest to those who subscribe to the debt instrument.
In a press statement, the Victoria Falls Stock Exchange (VFEX) said the BMAZ and BBMA’s agreement laid the groundwork for ongoing collaboration between the two with the view to enhance the capacity and capability of each organisation.
“We are pleased to announce that the BMAZ and the BBMA have signed a memorandum of understanding (MoU) to provide for on-going collaboration between the BMAZ and the BBMA with a view to enhancing the capacity and capability of each organization, and contribute to the development of bond markets in Botswana and Zimbabwe,” the VFEX said.
“The key objectives of the MoU are to facilitate information sharing including research findings, market insights, best practices and regulatory frameworks, and to promote peer learning through mutual capacity building activities and other collaborative initiatives, “revealed the statement.”
The VFEX revealed that the key objectives of the collaboration are to facilitate information sharing on research, market insights, best practices and regulatory frameworks.
Other objectives include promoting peer learning through capacity building activities and other joint initiatives.
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“The MoU expresses our commitment to fostering collaboration and cooperation between the bond markets of Zimbabwe and Botswana,” the VFEX said.
“The bond market is pivotal in capital formation, mobilisation and allocation for development and infrastructure projects and we believe this partnership will assist Botswana and Zimbabwe capital markets in the delivery of critical public infrastructure.”
The VFEX said it had seen the growing need for sustainable and green financing in the continent, hence, both Botswana and Zimbabwe’s markets stood to benefit from the MoU.
According to the Botswana Stock Exchange, the government bonds listed there have a valuation of US$1,71 billion, indicating a robust market for this debt instrument. At the Zimbabwe Investment and Capital Markets Conference in London, United Kingdom, held 12 days ago, Finance, Economic Development, and Investment Promotion minister Mthuli Ncube called on investors to introduce new bonds locally.
“I invite investors to come to Zimbabwe to introduce additional new instruments such as the catastrophic bonds, green bonds, infrastructure bonds, diaspora bonds, SME Infrastructure,” Ncube said.
As of the end of last year, the VFEX Depository had onboarded 14 issuers, which included 12 equity securities, one depository receipt, and a bond.
“The diversification of products on VFEX is also expected to play a significant role in the exchange’s growth prospects. This increased product diversity will not only attract new investors but also provide existing ones with more opportunities to diversify their portfolios,” VFEX and Zimbabwe Stock Exchange (ZSE) chief executive officer Justin Bgoni said, in the 2023 ZSE annual report.
“The ZSE’s outlook for the next trading year is therefore positive, driven by the anticipated economic growth, and increased product diversity on the VFEX.
“We are confident that these factors will drive growth and increase investor confidence in the exchange.”
He said the VFEX experienced notable progress last year, with the addition of six new counters to its listings and improved trading levels.
“This uptick in activity on the VFEX reflects growing confidence and interest from the market participants in this platform, underscoring the increasing momentum and viability of the VFEX as a key player in the financial market,” Bgoni said.
However, the VFEX All Share Index experienced a decline of 28,86% throughout 2023, ultimately closing at 70,48%.
“The total market turnover recorded on ZSE in 2023 was ZWL$555 billion and this is 320% compared to the previous trading year,” Bgoni said.
“The equities market contributed 98% of this turnover and the REITs and ETF board made up the remaining 2%,” Bgoni said.
“The VFEX on the other hand recorded USD $26 million in 2023 which was a significant 116% increase from 2022 turnover figures.
“This is highly attributed to the increased number of listings on the bourse."
