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Stability, enabling environment key in any business — Chirume

ALBAN Chirume (AC) was appointed Zimbabwe Stock Exchange (ZSE) chief executive last month following the departure of Emmanuel Munyukwi.

In this question and answer session with Ndamu Sandu (NS), the former Securities Commission of Zimbabwe boss opens up on his vision and the transformation from being the regulator to the regulated.

NS: What immediate measures should be put in place by the post-election government to ensure a better performance by ZSE?
AC: The important thing is stability. Consistency in policy pronouncement that’s critical. It reduces risk to the companies or investors. A lot of policies are already in place. Our problem is trying to get that stability in place and trying to ensure funding, creating an enabling environment. If we can get in new capital into the market and that is done by the stability.

NS: What is the impact of indigenisation on the stock exchange?
AC: Initially the market was negative on it when it was pronounced. The way I personally see the indigenisation is more to look at what are the benefits we can gain working towards some of the indigenisation policies. How can the stock exchange create avenues for companies to meet the indigenisation policy?

NS: In other countries, there are stock exchanges where indigenisation shares are traded. Are you looking into that and the creation of a secondary stock exchange for small to medium enterprises?
AC: We are looking at the second tier market. It’s one of our four major projects. We are targeting that in the first quarter 2014 we should have the market in place. We have done initial consultations with SMEs. There is a committee working on the listing requirements which involves capital.

In other markets, SMEs are defining them as less than US$3 million whereas to us that’s a company which might be on the main board. We need to have rules which meet our local environment. We are not looking at SMEs only but at companies with a potential to grow that would want to list. We are meeting all stakeholders.
On indigenisation, we are still putting our minds to it. We need to look at the whole indigenisation issues. Various people can see it as an opportunity for companies to create a market for them or to be part of the market. The four major projects we are doing are quite taxing and for now they are critical in what we are doing.

NS: What are the four major projects you are working on?
AC: The first one is automation of the trading platform. The second one is demutualisation or privatisation of the stock exchange. The third one is listings requirements. The fourth one is that SME (stock exchange). Below that we have other smaller projects. One of my passions is trying to create a bond market increasing the instruments traded on the stock exchange.

NS: How far have you gone with plans towards demutualisation?
AC: We have got two advisors of this project (Imara and Corporate Excellence) who are working together. We expect that in early October that process of working out the demutualisation will be in place.

NS: There are companies with primary listings elsewhere but have secondary listings on ZSE and some who are not listed elsewhere but are on the bourse. Are you looking at measures to reverse that?
AC: We are not going to reverse anything. The listing of a company on the stock exchange is on its own volition. You choose to be listed on a stock exchange because you believe that it will give you a good profile and you are able to raise money through your listing.

If you believe the market is not good enough to absorb your requirements, sometimes you list elsewhere. Sometimes you list because of the benefits of being listed in those areas.

There could be tax issues involved. What we need to work on is to ensure that our market is attractive; the Zimbabwe Stock Exchange is attractive for companies to list and what they want to see where there is good corporate governance and ensure that listing requirements are at international level and we do manage our listings. Now we are far quicker if we don’t see the company being able to meet the listing requirements or continuing obligations such as publications of financial statements, holding AGMs then we will ask them to delist. Those things make our markets attractive.

NS: What are your projections for market cap by year end?
AC: I haven’t come up with a figure. I will expect it to be more than where we are or about US$5 billion. It all depends on what happens after the election.

NS: How are you managing the transitions from being the regulator to the regulated?
AC: The transition is easy. When I was at the Commission I believed in what we were doing. I believed in fairness in what we were doing and that it is international practice. By coming to the stock exchange, I am confirming my belief in what we were doing. We are in constant conversations with our regulator on issues.

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