By Sharon Tawuya
Harare, (New Ziana) – The Zimbabwe Entrepreneurship Exchange (ZEEX) is pushing for tax incentives to attract more Small and Medium Enterprises (SMEs) to list and unlock capital, an official said on Wednesday.
The platform, launched three months ago, is housed under Zimbabwe Stock Exchange (ZSE) Holdings, parent of the Zimbabwe Stock Exchange (ZSE) and Victoria Falls Stock Exchange.
It was licensed by the Securities and Exchange Commission of Zimbabwe on 5 June and established on 12 July as the Zimbabwe Entrepreneurship Exchange ZEEX.
It is meant to help raise capital for SMEs.
Speaking at a COMESA side session on SME financing gap, ZSE chief executive Justin Bgoni said early engagement since the ZEEX launch shows appetite but incentives are now critical to scale up listings and investment.
“We have to be robust in engagement with policymakers, because we see ZEEX as a win-win platform for policymakers, business, and providers of funding. Providers of funding must be incentivized to come and provide capital there. Likewise, businesses coming to ZEEX also need to be incentivized. Let’s loosen the tax burden where they are coming on the platform,” he said.
Bgoni said the exchange was a direct response to onerous requirements on the main stock exchanges.
“The framework for onboarding listings on these big platforms is a bit onerous. It is discriminatory in terms of the minimum valuation that a company needs to have. So we thought it fit that we need a platform that speaks to SMEs and entrepreneurs. As a result, we came up with ZEEX,” he said.
ZEEX has four components. On private and public markets, Bgoni said: “To that effect, we have what we call ZEEX Private Markets. SMEs are coming to raise capital in the form of debt or equity without subsequently going on to list their shares for trading in the secondary market. So it’s only for capital raising, no listing. In other exceptional instances, we then create what we call an OTC market. If there is any need for a change of ownership within the register, we then facilitate the sale. Then we have ZEEX Public Markets. It mimics your big exchanges, save that the requirements to list on that platform are extremely flexible. We have streamlined (them) to accommodate as much as we can.”
To ease working capital, ZSE integrated the Invoice Discounting Marketplace, branded InvoiceX, which lets suppliers cash invoices within 48 hours.
“You supply your goods to big corporates, then you have 30, 60, 90 days to realize your invoices. But we are saying on the invoice discounting marketplace, you can realize your invoices even on an instant basis. So it helps to facilitate liquidity and improve day-to-day management,” he said.
The fourth pillar is DebtBridge, a bond holding company, he said.
“We have registered a bond holding company called DebtBridge. The role is to help SMEs that want to raise capital in form of debt on either the private or public markets by ceding the rights to their properties in that company, where in turn investors’ interest is registered in that bond,” he said.
On de-risking SMEs for pension funds, institutional investors and the diaspora, Bgoni said the platform must be attractive.
“What we need to do is make sure the platform is as lucrative, as attractive as it can be. So we have created frameworks that ensure proper risk management. Projects coming from SMEs onto that platform are fairly de-risked. We have put in place strong investor protection mechanisms,” he said.
He said governance and free training are mandatory for firms seeking to raise capital on the ZEEX.
“We have come up with incubation programs. This is what we call the PITP, the Prospective Issuers Training Program. In that program, we are training SMEs for free as the exchange to say, what is listing? What does it mean to raise capital on a stock exchange? We invite players across the value chain, brokers, sponsors, asset managers, financial advisors, to prepare SMEs for life in the listing chain,” he said.
“We have designated a function we call ZEEX Sponsor. It is an entity coming to help SMEs identify appropriate funding need. It’s a financial institution that will assess your funding needs. Then it will act as interface between the SME and the exchange and do the relevant documentation to bring the business to the exchange,” he said.
New Ziana
