Zvamaida Murwira Senior Reporter
Government is exploring ways to establish an offshore financial services centre in Victoria Falls as part of broader efforts to support the free flow of international capital into the country, Finance and Economic Development Minister Professor Mthuli Ncube, has said.
The centre is expected to develop and deepen the financial services sector through provision of opportunities for global investment.
Prof Ncube disclosed this yesterday in Victoria Falls at a Commodity Exchange Workshop attended by captains of the mining industry, senior Government officials, mining experts, small-scale and large-scale miners, and officials from the Dubai Gold and Commodities Exchange.
The workshop is being hosted by the Victoria Falls Stock Exchange in partnership with the Dubai Gold and Commodities Exchange.
“As you might be aware, the Government of Zimbabwe is exploring the setting up of an offshore financial services centre in Victoria Falls of which the envisaged commodities exchange will be a key component. The offshore financial services centre will help develop and deepen the financial service sector, through provision of opportunities for global investment. We can all agree that investment is essential in driving economic growth and creating an attractive investment climate is one step towards achieving that,” said Prof Ncube.
“An offshore financial services centre is in reality an attempt to create an investment environment in which international capital can flow freely. Free flow of capital requires both the supporting legislation, and the underlying products — of which the commodities exchange is part of the infrastructure that provides the investment products.”
Turning to what a commodity exchange entailed, Prof Ncube said it encompassed both the physical spot and derivative markets.
“The physical market is where buying, selling and subsequent delivery of commodities like oil, grain and metals takes place whilst the derivative market deals with financial securities that help participants in the physical market to hedge risk. The physical commodity markets can also be subdivided into agricultural, base metals, precious metals and energy markets. Derivative markets can be classified as Over the Counter or Exchange Traded,” he said.
Prof Ncube led a high level ministerial delegation to Dubai where Victoria Falls Commodity Exchange signed a strategic MOU with Dubai Gold Commodity Exchange and the two exchanges are already operationalising the agreement.
DGCX is a leading derivatives exchange in the Middle East and has played a pioneering role in developing the regional market for derivatives trading, clearing and settlement.
“It is therefore prudent and opportune for VFEX to tap into their expertise in setting up a commodities exchange as. As part of the agreement, the DGCX will extend technical support, knowledge and skills to VFEX, with the ultimate aim of establishing an international commodities exchange in Zimbabwe. My Ministry has supported the VFEX since it was mooted as an idea and we are encouraged to see that such a young exchange is quickly looking to broaden its products and services,’ said Prof Ncube.
Speaking at the same occasion, Mines and Mining Development Minister Winston Chitando said the mining sector was one of the main pillars of the country’s economy, contributing over 45 000 in formal employment and at least 50 percent in export earnings annually.
He said the Second Republic led by President Mnangagwa launched the US$12 billion Mining Industry Strategy in 2019.
“Under this policy document, priority is given to investments in exploration, opening of new mines, beneficiation and value addition of minerals as well as expansion of projects. A commodity exchange would complement this strategy as it represents an organised market for the finished or semi processed product from the mining sector. A transparent market may help curb smuggling in the sector and also assist miners in planning,” he said.
“As the Minister of Mines and Mining Development, I have to fulfil the vision set by His Excellency, in terms of growing the sector to a US$12 billion industry.”