Image: Gallo

Zimbabwe Finance Minister Tendai Biti

Biti is proposing far-reaching reforms to current legislation to enable further disclosures in the key markets and bust what he termed a "cartel on the Zimbabwe Stock Exchange".

"Our laws ... such as the ZSE Act and the Securities Act are lagging behind, and they ought to be amended," the lawyer said, adding that Zimbabwe could emulate the regulatory frameworks of countries such as Britain.

"If we had it our way (at the ministry), we would have a regulator like the Financial Services Authority, which handles the entire financial sector."

Several investment managers, including Stanbic Nominees, were last week rattled when Partnership Africa Canada claimed the investment firms were abetting illegal economic activities by investing in listed companies that held cash from the tainted Marange diamond fields.

But the SA-owned group has issued a strong rebuttal on that issue, saying its ZSE activities were above board.

Then Biti claimed 20 of the "shadowy players" were virtually controlled by the same individuals, and the country was caught off guard by the ReNaissance Financial Holdings Limited saga because of insufficient measures to detect insider dealings. As such, Zimbabwe urgently needed to invest in such technologies as a central depository, while modernising its operations as well.

While Biti railed at the tension between William Bonyongwe's Securities Commission of Zimbabwe and the local bourse, he also said the ZSE must be demutualised if the country was to avoid de facto control of the institution by a privileged clique.

He said company laws also required an urgent review to ensure that "controlling shareholders of certain companies do not railroad and override" minority investors, let alone executive managers. "We also have a disease of powerful shareholders who always want things done their way.

"You all know what l'm talking about if you have followed the issues at Hwange and Rainbow Tourism Group," Biti said in veiled remarks targeted at UK investor Nicholas van Hoogstraten.

Bonyongwe said corporate Zimbabwe must embrace corporate governance tenets in its totality to encourage investor confidence and integrity of the country's capital markets.

According to latest ZSE numbers, the exchange rose by nearly 70% in the past seven months and gained over $290-million in transactions mainly carried by foreign investors.