Introduction

The recent introduction of the Securities and Exchange (Licensing of Minerals Commodities Trading Participants on the Victoria Falls Stock Exchange) Rules, 2024 and the Securities and Exchange (Victoria Falls Stock Exchange Mineral Commodities) Rules, 2024 marks a pivotal moment not only for Zimbabwe but for the entire Sub-Saharan African region. These regulations have laid the groundwork for the trading of minerals and commodities on the Victoria Falls Stock Exchange (VFX), which is traded in United States Dollars, opening up a new frontier for entrepreneurs, investors, and the broader economy.

A Regional Catalyst and Global Impact

Zimbabwe's pioneering initiative to establish a commodity exchange, specifically the VFX, has the potential to catalyse economic development not only within Zimbabwe but across Sub-Saharan Africa. By demonstrating the viability and benefits of such a market, it can inspire other countries in the region to follow suit, leading to a network of interconnected commodity exchanges. This interconnectedness would foster trade, investment, and regional integration, while also providing a platform for African resources to be traded regionally, promoting economic integration and strengthening regional value chains. Moreover, the establishment of commodities trading on the VFX could have a broader global impact. As the commodity market in Zimbabwe grows and matures, it could attract international investors and traders, contributing to the country's integration into the global economy.

Impact on the Broader Economy

The introduction of commodity trading on the VFX can have a significant impact on the broader economy, including:

• Increased foreign direct investment (FDI): The VFX can attract foreign investors seeking to participate in the commodity market, bringing in much-needed capital and expertise.
• Job creation: The growth of the commodity market can lead to the creation of new jobs in various sectors, including mining, trading, finance, and logistics.
• Revenue generation: The government can benefit from increased tax revenue generated by the commodity market, which can be used to fund public services and infrastructure development.
• Price stability: A well-functioning commodity market can help stabilize prices for minerals and commodities, reducing volatility and benefiting both producers and consumers.
• Economic diversification: The commodity market can contribute to the diversification of Zimbabwe's economy, reducing its reliance on traditional sectors and making it more resilient to external shocks.

Examples from Other Markets

The success of commodity exchanges in other jurisdictions, such as the London Metal Exchange (LME) and the New York Mercantile Exchange (NYMEX), provides valuable insights into the potential benefits of such markets. These exchanges have played a crucial role in driving economic growth, attracting investment, and fostering innovation in their respective countries.

Closer to home Rwanda's Ministry of Trade and Industry led the initiative for the Rwanda Commodity Exchange (RCX) in 2011, initially focusing on agricultural commodities. The RCX has since expanded its scope to include metals, minerals, and energy resources. Collaborations with the Ethiopian Commodity Exchange and the Nicholas Berggruen Institute led to the formation of the East African Exchange (EAX) in 2013, reflecting the growing interest in regional commodity markets.[1]

Conclusion

The introduction of commodity trading on the VFX marks a significant milestone for Zimbabwe and Sub-Saharan Africa. By providing a platform for efficient trading, attracting investment, and stimulating economic activity, the VFX has the potential to drive growth, create jobs, and foster regional integration. The broader economic benefits of this initiative, including increased FDI, job creation, revenue generation, and price stability, make it a compelling opportunity for entrepreneurs, investors, and the region as a whole.

[1] (MEZUI, et al., 2013)