Last year Zimbabwe’s Finance Minister announced that the government had launched a commodities exchange dubbed the Zimbabwe Mercantile Exchange Private Ltd (ZMX Ltd). The exchange would be used to trade futures and commodities pertaining to 18 commodities mainly agricultural products. Turns out he might have fibbed a little. Even though the exchange has a website it has existed in name only recently the government made a significant step in turning the plan into action. They announced who the shareholders of the company would be.
Cabinet has approved the shareholding structure for the Zimbabwe Commodities Exchange (ZMX) as follows; FINSEC (22.5%), TSL (22.5%), CBZ Bank (35 %) and Government (20 %). ZMX is an organised digital platform to trade commodities with fair price discovery.The Ministry of Information
Encouraging news from the government
So why is this exciting news? Well in Zimbabwe you can usually tell how well an idea is going to be translated into action just by looking at who is tasked with the process. While the Zimbabwe government has been completely useless on that front, remember ZIMASSET and other hollow high sounding plans that came to nought,it is pleasing to note their role is only reduced to 20%. The other players are serious powerhouses in their fields:
- FINSEC has revolutionalised the way people buy and sell shares in Zimbabwe from the old archaic system of calling your broker and introduced apps and other systems that have made retail investing painless. They are a company of action and not just mere words.
- TSL own and operate one of the largest auction flows in Africa. They already know how to buy and sell commodities and are responsible from bringing a lot of foreign currency into Zimbabwe.
- CBZ the largest shareholder is one of Zimbabwe’s largest and very active banks. Despite their affiliation with the said government of words and no action they have been very innovative. They were one of the first banks to introduce an app-CBZ Touch.
Why is ZMX important
Hate it or love it, Agriculture is one of Zimbabwe’s economic backbones. Unfortunately ever since the land reform, the sector has been plagued by various problems not least of which are lack of capital and well-established markets. Those who farm often find it hard to sell their products at fair prices. Most farmers just have to visit Mbare Musika and peddle their wares.ZMX will be an advanced form of Mbare Musika allowing commodity sellers to interface with buyers on a much more modern platform. It will be nice if they actually have a presence on Mbare Musika.
I am a big believer in free markets. Maybe the government will see the value of a free market system and stop its command pricing systems that have undermined the tobacco, cotton and maize sectors.
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