Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Investor confidence wanes

Investor confidence wanes

By Editor
Monday, 25 July 2011 14:17

HARARE – Zimbabwe’s indigenisation policy has dampened foreign investors’ 
confidence and participation on the Zimbabwe Stock Exchange (ZSE), the 
African Development Bank (AfDB) has said.

In its monthly economic review for July, the continental lender said shares 
worth $13,1 million were bought by external investors on the local bourse 
compared to those disposed with a value of $17,3 million – culminating into 
a $4,2 million net capital outflow.

“This negative development reflects waning investor confidence, particularly 
in view of intensified indigenization and economic empowerment initiatives 
as well as uncertainty surrounding future elections,” said AfDB.

It said “the substantial disposal” happened or occurred around June 10 when 
uncertainties about the outcome of the Southern Africa Development Community 
summit held in Johannesburg, South Africa were heightened.

The regional development bank said about 350 million shares were traded on 
the ZSE last month alone.

The indigenisation policy – which requires all foreign-owned firms to cede 
at least 51 percent of their shareholding to black Zimbabweans – has majorly 
affected sectors like mining.

Officials in President Robert Mugabe’s government, notably Empowerment 
minister Saviour Kasukuwere, say the programme would be extended to several 
other sector, including manufacturing and the sensitive banking industry.

As a result, foreign investors have taken a cautious approach and stance 
towards Zimbabwe, yet its economy is mainly driven by resource or extractive 
sectors such as mining.

The AfDB said the Zimbabwe Investment Authority approved nearly 75 projects 
in the five months period to June, indicating a marginal increase from the 
72 approved in a similar period last year.

The approved projects have an estimated value of $906 million, as compared 
to those approved in 2010 and worth an estimated $104 million. Out of the 75 
projects, 15 were mining.

In May, ZSE chief executive Emmanuel Munyukwi said the prevailing and acute 
liquidity challenges, coupled with limited foreign investor participation, 
were weighing down the local bourse.

He said the equities market remained depressed, with daily turnover touching 
a lowly $600 000 per day from a peak of $1,5 million.

“We should know that foreign investors are the ones with the money. Their 
increased participation means more activity on the market,” he said.

However, he said “foreign investors have not totally deserted the market, as 
they remain very keen on Zimbabwe, but uncertainty had affected their 

Munyukwi particularly singled out Kasukuwere’s indigenisation programme as 
one of those policies causing investors to be jittery.

He said the ZSE recorded a net inflow – the difference between shares bought 
and sold by foreigners – of $6 million in January and $4 million in February 
this year, while net outflow was at $2 million in March and this reflected 
lower investor participation during the month.

However, the inflows improved to $2 million in April. Market turnover, 
meanwhile, has been on a similarly yoyo trend, with January’s figure hitting 
$32 million, while it leapt to $47 million in February.
In March, it fell back to $36 million, while a figure of $35 million was 
recorded in April.


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