Southern Africa

Old Mutual to move Zimbabwe listing as currency war escalates

  • Old Mutual is expected to stop trading on the stock exchange in Zimbabwe.
  • The insurer has decided to transfer its listing in the country to a new bourse that will only deal with foreign currency, according to people who are familiar with the matter.
  • The Government of Zimbabwe has blamed a fall in local currency on the share price of the 175-year-old insurer.

Old Mutual is expected to stop selling its securities on the Zimbabwe Stock Exchange, the latest step in attempts by the government to restore stability to the volatile foreign-exchange market.

The insurer decided to transfer its listing to the country’s new bourse that would trade exclusively in foreign currency, said three people with direct knowledge of the matter.

The deal came after talks between representatives of Old Mutual, the Treasury, Zimbabwe’s Securities and Exchange Commission and the ZSE on Monday, the people said, asking not to be named as negotiations were private.

President Emmerson Mnangagwa ‘s government has blamed a fall in local currency on the share price of the 175-year-old insurer. The so-called Old Mutual Implied Rate was used by businesses to calculate the forward value for the Zimbabwean currency using variations in the dollar values of the shares of the company in London, Johannesburg and Harare.

Through eradicating the implied rate, the governing party of the nation is trying to end a multitude of exchange rates used by Zimbabweans to tackle the various economic problems that the country faces.

Last week, the government laid down new rules to force companies to use a single exchange rate for pricing goods and services in a bid to curb 737 per cent inflation in a nation grappling with food-to-fuel shortages.

Tabby Tsengiwe, the spokeswoman for the Johannesburg-based insurer, did not respond to a call or a text message requesting comment. Finance minister Mthuli Ncube did not answer requests for comment.

Another conference to address logistical problems and discuss the finer points is planned for next week, the people said.

A increase in Zimbabwe ‘s Old Joint stock – which, like other shares, was used as a buffer against inflation – broadened the distance between its South African and UK securities, taking the OMIR up to 122.

The Zimbabwe dollar has weakened to 72,1470 per US dollar on a foreign-currency auction scheme launched last month after a currency peg of 25 fell.

Terminating the listing of Old Mutual paves the way for dealing to resume on the Harare-based ZSE – which was unexpectedly suspended on June 28 – once the Financial Intelligence Unit of Zimbabwe has completed a bourse trading check. It is still uncertain when the stock exchange will start operations in the resort town of Victoria Falls.

Old Mutual, which was listed on the Zimbabwe Stock Exchange in December 1999, opened its first country office in 1902 and offers the country ‘s health, property and casualty insurance, wealth management , land development, and banking services.