Published: 17 July 2025

The Zimbabwe Stock Exchange (ZSE) is experiencing an unprecedented wave of foreign disinvestment as investors increasingly fail to remit their local earnings out of the country, sources familiar with the market told NewsDay Business.

This challenge has worsened since April 2025, coinciding with the introduction of the Zimbabwe Gold currency (ZWG), amid a liquidity crunch triggered by tight fiscal and monetary policies. The inability to repatriate foreign currency earnings has prompted several major foreign companies, including Botswana retailer Choppies Enterprise Limited and multinational giants PricewaterhouseCoopers International Limited and Unilever PLC, to exit Zimbabwe in the past year.

Recent data reveals that foreign investor activity on the ZSE has been predominantly focused on selling, with many scrambling to liquidate holdings and exit the market. This has left local investors to sustain a bourse starved of fresh external capital.

Financial analyst Ranga Makwata noted that while mechanisms such as the willing buyer willing seller platform and relaxed exchange controls at the Victoria Falls Stock Exchange (VFEX) were introduced to ease external payments issues, these measures have been insufficient.

"It's like closing the stable door after the horse has bolted," Makwata said. "These efforts have largely failed to stop capital flight and have fared poorly in attracting new funds."

He highlighted that foreign participation in the ZSE has declined sharply from about 50% during the dollarisation era to under 10% currently. Foreign turnover peaked at US$184 million in 2013 and US$282 million in 2014, but had shrunk to approximately US$25 million last year.

Makwata pointed out that foreigners are now mostly sellers. "In the first half of 2025 on VFEX, only 1% of purchases were by foreigners compared to 14% on sales, indicating a predominant exit trend."

He added that Zimbabwe's market is less attractive compared to other African exchanges due to difficulties in transferring funds offshore, with many investors still waiting to repatriate blocked funds.

South African cement producer PPC Limited recorded a cumulative negative fair value adjustment of ZAR413 million by March 31, 2025, linked to blocked funds held by the Reserve Bank of Zimbabwe (RBZ) from its local subsidiary.

Many affected companies have reluctantly accepted Treasury Bills (TBs) as compensation for their blocked funds, but Makwata said these TBs are heavily discounted in the market, resulting in losses for investors.

"Investors are uncomfortable with having to give away value through discounting financial instruments or navigating complex procedures to move money out," he said.

Further underscoring liquidity constraints, Justice Minister Ziyambi Ziyambi disclosed in Parliament on May 14 that banks had supplied only US$10 million in foreign currency requests against a demand of US$25 million in the preceding week.

Adding to investor concerns is the prolonged suspension of Old Mutual Zimbabwe shares, a subsidiary of South African financial services firm Old Mutual Limited, which remains unresolved.

As Zimbabwe's capital markets face mounting pressure, the challenge of blocked funds and restricted forex access continues to deter foreign investment, threatening the stability and growth prospects of the ZSE.
- NewsDay

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