IN an effort to address Zimbabwe’s persistent capital market challenges, Chengetedzai Securities Depository Company (CDC) is launching an awareness campaign on securities lending and borrowing (SLB), a financial practice that could alleviate liquidity shortages and bolster local markets.
This initiative will be highlighted at an upcoming conference on November 14, as CDC celebrates its 10th anniversary.
SLB, a widely adopted practice in developed markets, involves a lender temporarily transferring ownership of securities, such as stocks or bonds, to a borrower in exchange for collateral — typically cash or other securities — and a fee.
Any investor with shares in listed securities is a potential participant in the SLB process, offering a route to liquidity and additional income generation.
Speaking ahead of the SLB conference, CDC CEO Prosper Mutorogodo said the conference, themed “Deepening Capital Markets in Zimbabwe”, is the first in a series aimed at fortifying the local market.
“As we mark 10 years of operation within Zimbabwe’s capital markets, we also remain excited to continue innovating and bringing new market offerings similar to the securities lending and borrowing product,” Mutorogodo stated.
“The conference aims to educate the market and raise awareness on SLB, an initiative aimed at growing and developing our local capital markets.
“The highlight of the event is the presentation by our Kenyan counterparts, who have already launched a similar product to take through the local capital market participants and stakeholders through their experiences so far and outlook into the future,” he added.
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The conference, being held in partnership with Zimbabwe Independent, will bring together local and regional experts to discuss the steps necessary to ensure Zimbabwe’s markets remain competitive regionally and internationally.
One of the CDC’s primary challenges, Mutorogodo explained, has been underutilisation of existing systems’ capabilities due to limited product offerings. Despite this, the CDC’s system is internationally AAA-rated.
“The good thing is that since the market was digitised, this is no longer the case as a number of new products have recently been launched,” Mutorogodo said.
“Systems implementation and operation comes with attendant annual costs denominated in foreign currency hence the challenge becomes the balance between sustaining and expanding the business versus the demand for forex licence fees annually
"It has also been a challenge to attract and retain specialised skills locally given the propensity for highly skilled people to always be seeking greener pastures oftentimes overseas.”
He said key amongst the attempts to resolve the challenges was stakeholder engagement starting with discussions with the shareholders, the regulators and the Ministry of Finance, Economic Development and Investment Promotion.
“Efforts are also continuous to educate investors in conjunction with other capital market players and regulators,” Mutorogodo said.
“Overall, securities lending and borrowing plays a vital role in the financial markets by increasing liquidity, facilitating various investment strategies, and generating additional income for
investors.”
The conference will feature presentations from Kenyan experts and local professionals, covering SLB’s purpose, benefits for lenders and borrowers, collateral requirements, and associated risks.
Mutorogodo expects the event to enhance CDC’s reputation as a key driver of innovation in Zimbabwe’s capital markets, helping participants understand the economic impact and opportunities in SLB.
“By the end of the event, we expect that CDC will have regained the greater part of its reputation as a key market infrastructure that spearheads innovation and deepening of our capital markets,” he said.
“We also hope that everyone will now know the shareholders behind CDC by the end of the event and into next year as we continue with the 10th year anniversary theme.”
