Nyambira Chivasa Correspondent

Zimbabwe has taken a bold step forward with the introduction of its new gold-backed currency, the Zimbabwe Gold (ZiG). This move, underpinned by significant local, regional and international advice, including from the International Monetary Fund, has sparked a wave of optimism among both consumers and businesses about the country’s economic prospects.

Traditionally, the introduction of a new currency in Zimbabwe has been fraught with significant challenges, often resulting in considerable confusion within the business sector, marked by shortages of basic commodities, and economic standstills that paralyse daily life.

These transitions have historically sparked widespread uncertainty and speculation, which in turn has disrupted market stability and consumer confidence. The mere announcement of a new currency could lead to pre-emptive price hikes, hoarding of goods, and even a temporary collapse in normal trading activities as businesses and consumers alike struggle to adjust to the new financial landscape.

However, the recent launch of ZiG marked a departure from the past with major retail outlets swiftly adjusting their pricing to align with the ZiG, ensuring business continuity and fostering a sense of normalcy. This smooth transition has allowed people to continue their shopping routines without the panic and uncertainty that typically accompany such significant economic changes.

The proactive measures taken by the Government and the Reserve Bank of Zimbabwe to stabilise the ZiG and promote its acceptance across the economic spectrum have played a crucial role in maintaining market stability.

The result is a consumer environment where confidence in the new currency is growing, helping to stabilise prices and ensuring that the daily economic activities continue unhindered by the fear of currency volatility.

Responding to a widespread public outcry over high bank charges, the Reserve Bank of Zimbabwe has taken decisive action to implement policies aimed at reducing fees for low-cost accounts. This significant policy shift is designed to alleviate the financial burden on ordinary Zimbabweans, ensuring that their account balances are not eroded by excessive fees. By making banking more accessible and affordable, these measures help preserve the hard-earned money of everyday citizens, fostering greater financial inclusion across the country.

Moreover, these new banking policies do more than just preserve account balances; they actively promote a culture of saving among the population. Encouraging saving is crucial for economic stability and personal financial security, particularly in a country facing economic challenges.

With reduced bank fees, more individuals are incentivised to save their money in banks, which not only provides them with a safety net, but also contributes to the overall pool of national savings. This increase in deposits can then be leveraged by banks to provide more loans to businesses and individuals, stimulating economic activity and growth. Through these thoughtful adjustments, the government demonstrates its commitment to creating a banking environment that supports the welfare and economic advancement of its citizens.

President Emmerson Mnangagwa’s administration has shown unwavering support for the implementation and stabilisation of the local currency, viewing it as a cornerstone for Zimbabwe’s socio-economic development.

President Mnangagwa has consistently argued that true economic independence and sovereignty are tightly bound to the strength and stability of a nation’s currency. By promoting the use of the ZiG and emphasising its crucial role in the economy, the Government aims to detach from dependency on foreign currencies, which have historically brought about a slew of economic challenges and vulnerabilities.

This steadfast approach underlines a strategic move towards bolstering national confidence and ensuring that economic policies are firmly rooted in enhancing the local currency’s value and acceptance both domestically and internationally.

These efforts by President Mnangagwa’s administration have been met with positive outcomes, as evidenced by the notable growth in the country’s Gross Domestic Product (GDP). This increase is a testament to the improving health of Zimbabwe’s economy and signals to both local and foreign investors that the country is crafting an environment conducive to investment and growth.

The rise in GDP not only reflects the initial successes of adopting a local currency but also highlights the potential for sustained economic improvement. By fostering a stable and predictable economic environment through a strong national currency, Zimbabwe is effectively inviting investment and encouraging local enterprises, setting a solid foundation for future economic expansion and increased national prosperity.

Despite these positive strides, some critics remain sceptical about the Government’s capacity to stimulate the economy solely based on the resources backing the new currency. However, recent developments suggest that these concerns may be overly cautious. The Government’s crackdown on illegal money changers and the assurance of adequate foreign currency reserves by the central bank are bolstering confidence in Zimbabwe’s financial markets.

The ongoing construction of the Dinson Iron and Steel Company (Disco) steel plant, a monumental project set to be one of Africa’s largest steel producers, is a prime example of Zimbabwe’s forward momentum. This initiative, alongside others like the Champion Foods milling plant and the revitalisation of the Kamativi mining projects, illustrates a clear trajectory towards substantial economic growth and job creation.

These projects are not just about industrial growth; they reflect a broader commitment to stabilising and strengthening the Zimbabwean economy through strategic resource management and infrastructure development. The structured approach to managing the ZiG’s value, particularly its linkage to gold, a universally valued stable asset, enhances its credibility and long-term viability.

As Zimbabwe continues to navigate its path towards Vision 2030, the role of the ZiG becomes increasingly central. The structured management of the money supply and the strategic reserve of precious minerals and foreign currency reserves underpin this vision. The success of this currency, therefore, is not just about economic policy but about fostering a sense of national pride and sovereignty.

In conclusion, while the journey ahead is complex and fraught with challenges, the foundational steps taken with the ZiG currency suggest a promising horizon. For Zimbabwe, a stable and respected local currency is not just an economic tool but a symbol of resilience and independence.

The ongoing efforts to support and strengthen the ZiG will likely play a critical role in shaping the country’s economic future, making it an endeavour worthy of both national and international attention.

IN light of recent developments following the introduction of Zimbabwe’s new currency, the Zimbabwe Gold (ZiG), and its subsequent impact on the stock market, The Southern African Times has conducted an exclusive interview with Justin Bgoni, CEO of the Zimbabwean Stock Exchange (ZSE).

Motivated by a recent Bloomberg report titled “Zimbabwe’s ZiG Wipes Out 330% Stocks Rally” issued on April 23rd, this interview seeks to delve deeper into the challenges and opportunities presented by the transition to ZiG.

With insights drawn directly from the CEO, this article aims to provide clarity and transparency surrounding the implications of ZiG on the stock market, investor sentiment, and the strategies being implemented by the Zimbabwean Stock Exchange to navigate this period of transition. Let’s dive into the conversation with Justin Bgoni to understand the facts behind the headlines.

Answer: Just to set the record straight, following the introduction of ZiG on 05 April 2024, the ZSE started to trade in the new currency ZiG effective 08April 2024. The weekly average trading volumes before conversion from ZWL to ZiG was 13,760,410 shares, and 938,550 shares after the conversion.

We can attribute this to the fact that It also took time for participants to fine-tune their systems, as you might be aware that the capital markets consist of different players. Investors pre-fund their accounts through their bank, and most investors were not able to immediately trade during the period as they waited for the conversion of their accounts from ZWL to ZiG.

We are in a transition period, considering that the currency has been in use for less than three weeks now, so it is still too early to measure investor confidence. However, the fundamentals of the market have not changed and we are patient on this with our investors  as they also need to understand the new currency.

Answer: The ZSE engaged and continues to engage custodian banks on their migrations since these are key stakeholders in our ecosystem. Since conversion and complete migration of the banking sector to ZiG, a gradual increase in trading volumes has been noticed from the first week which had 478,943 shares traded to 2,070,756 shares the following week (week ending 19/04/2024) which is a 332% increase.

Investors are also still trying to understand the values after the conversion, and it will take time, so as the ZSE we remain patient. We have been communicating to our stakeholders on how we converted the share prices and we will continue with the communication so people understand. In the long run, as the confidence builds up, liquidity will also improve.3. Question:  Investors seem to be hesitant and unclear about the value of ZiG terms. What steps is the Zimbabwe Stock Exchange taking to educate investors andclarify the value of ZiG?

Answer: The ZSE issued a public notice advising investors on how we conducted the conversions of the share prices effective 08 April 2024. CLICK HERE TO DOWNLOAD NOTICE.

The public notice indicated the conversion rate used by the ZSE at the initial conversion exchange rate of ZiG 1 to ZW$2498.7242 which was prescribed in the operational manual for structured currency issued by the RBZ on 5 April 2024.

The notices we issued included the trading adjustments, the settlement adjustments, and the trading  adjustments on the ZSE Direct (the ZSE online trading platform). The ZSE also communicated with participants on the conversion of all share prices and the opening price sheet was shared  before the first day when we started trading inZiG which was on the 08 th of April 2024.

Answer: The conversion rate has not directly affected any trading  activities, as this was prescribed by the central bank, The ZSE was able to convert its system in time for investors to trade.

What can be attributed to  the change in trading activities is that people are still trying to understand the new currency and considering that it has been less than three weeks, we understand the trading behaviour of the investors.

However,during this period, some brokerages can be cushioned considering  that they are also licensed on the VictoriaFalls Stock Exchange and investors are also trading on  the bourse.

Answer: As mentioned above, the stockbrokers are independent of the ZSE, as they are licensed participants with their businesses, therefore during this period as investors are still understanding the new currency, they can take advantage and push trades on the Victoria Falls Stock Exchange.

Answer: The ZSE platform trades in local currency, therefore we used the conversion rate that was prescribed in the operational manual for structured currency issued by the Reserve Bank of Zimbabwe on 5 April 2024.

Answer: Our engagements with investors over the years have significantly contributed to the level of understanding that  investors now have when it comes to how the market functions. 

The number of securities held was not altered, and the market will eventually get back to its normalcy as understanding of the new currency improves.

These efforts by the ZSE will have a positive effect on overall earnings or returns. The ZSE is also focusing on diversifying our product offerings as this will assist in restoring confidence and improving trading activities.

Answer: Our focus is on diversifying our product offering and expanding the instruments offered on the exchange.

12. Questions: Considering the challenges posed by the transition to ZiG, how does the Zimbabwe Stock Exchange plan to ensure the continued growth and stability of the  stock market in Zimbabwe?

Answer: As stated above, it is important to allow our investors time  to understand the new currency, once the understanding  improves, we will see increased activity on the market. It is, therefore, a collective effort between all the participants and the Government.

We will continue to play our role as the ZSE in promoting financial education as well as diversifying our product offering to ensure continued growth.

In conclusion, the interview with Justin Bgoni, CEO of the Zimbabwean Stock Exchange, sheds light on the complexities surrounding the introduction of the Zimbabwe Gold (ZiG) currency and its impact on the stock market. Bgoni’s insights provided valuable clarity on the challenges faced by investors, brokerages, and the stock exchange itself during this transition period.

Despite the initial hurdles and uncertainties, Bgoni emphasized the Zimbabwean Stock Exchange’s commitment to addressing these challenges and ensuring market stability. From strategies to educate investors about ZiG’s value to supporting brokerages through revenue declines, the ZSE is actively working to navigate the transition.

As Zimbabwe continues to adapt to the new currency landscape, the Zimbabwean Stock Exchange remains a pivotal player in maintaining investor confidence and facilitating economic growth. With proactive measures and a focus on transparency, the ZSE aims to overcome the current obstacles and pave the way for a thriving stock market in the future.

Source: The Southern African Times

Ariana Resources PLC has agreed to an all-share merger with Rockover Holdings and dual-list the new enlarged company in London and on the Australian Securities Exchange.

Currently, Ariana has a 2.1% stake in Rockover, which owns 100% of the 1.3Moz Dokwe gold project in Zimbabwe.

Following the merger, Ariana shareholders will own around 62.5% of the enlarged company with Rockover shareholders having the remainder.

On completion, the company will still be known as Ariana Resources.

Kerim Sener, Ariana’s managing director, commented he was thrilled by the deal which adds an opportunity to acquire a major new gold development project and expands the miner beyond its well-established Turkish operations.

“The planned addition of the c.1.3Moz Dokwe gold project to our portfolio as a wholly-owned asset marks a substantial step toward our stated aim of establishing a global resource base of approximately 5Moz by 2025*,” he added.

“This transaction, based on a substantially derisked, feasibility stage project, which contains >95% of its JORC Compliant Mineral Resources in the Measured and Indicated categories aligns closely with our strategic objectives.

“Furthermore, the acquisition metrics of this project are very similar to our historic discovery cost, demonstrating that Dokwe represents an excellent value proposition.

“Based on a Pre-Feasibility Study completed for Dokwe in 2022, we anticipate advancing the Dokwe project towards production within the next three years, at a proposed annual production rate of 60,000oz increasing to potentially 100,000oz of gold over approximately ten years based on current Resources and Reserves.

“Our confidence in this project has developed in parallel with the positive jurisdictional improvements witnessed in Zimbabwe since late 2017, particularly the dollarisation of their economy, support of a government which recognises the value of its mining industry (accounting for 12% of a GDP of c.US$30 billion) and which encourages foreign investment in the sector for the benefit of its people.”

A Pre-Feasibility Study (2022) on the Reserves at Dokwe based on a mine life of 13 years generated a post-tax NPV10 of US$72 million and an IRR of 25% at a gold price of US$1,650/oz; though that economic model is currently being revised said the statement.

Source: Prospective Investor