Ngonidzashe Chiutsi Business Correspondent
LOCAL companies have been urged to list on one of the oldest exchanges in Africa, the Zimbabwe Stock Exchange (ZSE), as it has become a cheap source of funding where transactions worth $56,8 million for listed companies in the mining sector have been approved since 2009, an official has said.Mining firms are grappling with a liquidity crisis and reportedly require between $5 billion and $7 billion fresh capital to raise output and re-equip over the next five years.
ZSE chief executive officer Mr Alban Chirume said by listing on the stock exchange, companies could get the much needed capital.
“There are several advantages of listing like getting cheaper source of funding, and ability to attract investors. Since 2009 ZSE has approved circulars for transactions worth $56,8m for listed companies in the mining sector,” said Mr Chirume last week.
He said listing on the stock exchange lowered perceived risk by investors due to regulations.
“When a company is listed on the stock exchange, it has the ability to access loans at lower interest rates, attract and retain skills. It has also the ability to attract strategic technical partners through private placements,” he said.
The ZSE official said there were also opportunities for dual listing for companies, like the case of Hwange Colliery and Bindura Nickel Corporation which are listed on ZSE and on other foreign bourses.
Mr Chirume said the ZSE, despite having gone through different economic cycles, was still vibrant.
“At ZSE there are high levels of foreign participation and low currency risk. ZSE is the only stock exchange in Africa using the American dollar and is more liquid than most African exchanges,” he said.
The official bemoaned that fact that in spite of mining being one of the largest exporters and contributors to the Gross Domestic Product in the country, this was not reflected on the ZSE.
ZSE has only four listed mining entities which constitute the mining index namely Hwange, RioZim, Bindura, and Falgold.
Bankers Association of Zimbabwe (BAZ) immediate past president Mr George Guvamatanga also urged companies to look for alternative sources of funding as local banks had no capacity to fund them.
“The banking sector is characterised by slightly above $4 billion in deposits of which above 70 percent are transitory in nature. This on its own is a major handicap for the banking sector to be able to finance the mining sector. It is out of these little resources that all sectors require a share,” said Mr Guvamatanga.
“It is imperative to look at the alternative sources of financing to circumvent the liquidity challenges affecting the country,” he said.
Mr Guvamatanga said some of the methods of raising capital included issuance of corporate bonds, joint partnerships and royalty funding.