Zimbabwe created a US dollar-denominated exchange in Victoria Falls, the Victoria Falls Stock Exchange (VFEX), to offer issuers and investors a rules-based
Introduction
Zimbabwe created a US dollar-denominated exchange in Victoria Falls, the Victoria Falls Stock Exchange (VFEX), to offer issuers and investors a rules-based “hard currency land” for capital raising and secondary trading, in an environment where domestic currency instability and exchange controls have historically deterred long-term investment. VFEX has the potential to become a credible conduit for hard currency capital into Zimbabwe and regional firms, particularly exporters and mining/tourism firms, but only if the country sustains a predictable exchange control regime, deepens market liquidity, and builds a governance framework that global investors can trust. Its relationship to the Zimbabwe Stock Exchange (ZSE) in Harare is both complementary and competitive. It could modernize market infrastructure and widen investor choice, but it could also drain liquidity and “best issuers” from the domestic equity board, entrenching a two-track financial system, unless domestic currency credibility improves.
Why VFEX Was Created and What Is Unique About It
In the summer of 2020, after allegations that ZSE transactions were contributing to currency instability, the government of Zimbabwe suspended trading. In August of that year, the government created the VFEX, and issued Statutory Instrument (SI) 196 of 2020, titled Exchange Control (Special Provisions for Securities Listed on Victoria Falls Stock Exchange) Regulations, under Section 2 of the Exchange Control Act (Chapter 22:05). The purpose of the regulations was to set out exchange control rules for companies listed on the VFEX, to ensure currency stability and reduce local currency risk, regulate the source of capital raised on the exchange, and encourage reinvestment of foreign capital. Securities listed on the exchange must be tradable and settled solely in US dollars or a convertible currency.
Zimbabwean and foreign companies can list on the exchange if their capital is raised from offshore sources or free funds, and capital raised on the exchange can be held in approved local or offshore accounts with an internationally recognized bank.
The exchange was launched to leverage Victoria Falls’ global profile and attract foreign investment to Zimbabwe. This is part of a broader government framework to manage capital flows and ensure that foreign currency-denominated listings contribute to local economic activity.
Victoria Falls is now being considered a special economic zone and, recently, as an international financial services center. VFEX is intended to be an “anchor tenant,” an institutional signal to investors that Zimbabwe is willing to create a fenced-off, internationally oriented set of rules for selected activities, even when the domestic economy is in turmoil. The Victoria Falls Special Economic Zone (SEZ) is designed to be a multi-sector, tourism-driven hub, somewhat parallel to China’s Shenzhen Special Economic Zone model, albeit with a different regional and economic context. In addition to expanding and upgrading the tourism and hospitality infrastructure and offering international financial services, the SEZ will include satellite towns and areas to house commercial, power-generation, and tourism facilities, rather than the industrial, export-driven manufacturing approach of Shenzhen. Rather than aiming to become a manufacturing hub, the SEZ aims to make Victoria Falls a regional conference, finance, and leisure capital.
What Is VFEX?
VFEX is as much a policy instrument as an equities market. One of its main objectives is to reassure investors, foreign and domestic, that there is a safe place to invest in Zimbabwe free from the turmoil that has roiled the domestic economy. As of December 2025, Zimbabwe’s economy was projected to grow by 6.6 percent, driven by recovery in agriculture and manufacturing, high inflation and public debt remain challenges. Inflation has averaged between 100 and 150 percent due to currency instability and supply-side disruptions. The country has substantial public debt and external arrears, constraining access to affordable financing. The high debt service costs crowd out essential investments. Politics also poses challenges to the economic situation. President Emmerson Mnangagwa’s efforts to reset relations with the United States have the potential to increase American assistance and investment, but also pose a risk of alienating Zimbabwe’s traditional allies within the Southern African Development Community (SADC). Policy consistency and investment in key sectors will be crucial if Zimbabwe is to sustain the gains it has made. VFEX has the potential to be the strategic platform not only to sustain but also to expand its economic gains.
One of VFEX’s main goals is to lower the cost and increase the feasibility of raising capital for firms whose investment needs are naturally dollar-linked. This includes exporters, miners, regional retailers, tourism operators, and firms with imported input chains. In Zimbabwe’s volatile domestic currency environment, raising equity in local currency can produce financing that is quickly eroded in real terms. By offering settlement in US dollars, VFEX aims to align financing currency with investment currency, improving corporate planning horizons and facilitating project underwriting.
To compensate investors for Zimbabwe’s country risk, VFEX offers several incentives, including a 5 percent dividend withholding tax, exemption from capital gains withholding for foreign investors, and reduced exchange control restrictions. Even though organizationally it is a subsidiary of ZSE, it offers lower trading costs than ZSE.
By January 2024, VFEX had a market capitalization of over $1.2 billion and had traded more than $26 million worth of shares. VFEX’s goals are aligned with Zimbabwe’s National Development Strategy 1 (NDS1), a five-year plan that aims to achieve macroeconomic stability, inclusive growth, and social development.
VFEX is organized along a hybrid public-private line, as part of Zimbabwe Stock Exchange Holdings Limited (ZSE Holdings), the investment holding company for Zimbabwe’s capital markets. The Government of Zimbabwe has a controlling 32 percent interest in ZSE Holdings. While this might raise concerns about political interference if market governance is seen as an extension of state policy rather than a neutral utility, it can also help align VFEX with national development priorities and make fund repatriation commitments more credible if government authorities are seen as invested in success.
On May 5, 2026, Zimbabwe announced Statutory Instruments 62 and 63, which shifted VFEX from the oversight of the Securities and Exchange Commission of Zimbabwe (SECZ) to the Victoria Falls International Financial Services Centre (IFSC). While this is not an iron-clad guarantee of no government interference in VFEX’s operations, the creation of the IFSC seems to indicate the government’s desire to establish firewalls between the Victoria Falls Special Economic Zone and the turmoil of Zimbabwe’s domestic economy. The real test will be whether rule changes in IFSC and VFEX are consultative, transparent, and predictable over time, particularly during times of currency or fiscal stress.
Performance to Date
Public reporting indicates that VFEX has grown, albeit from a small base. Despite a challenging environment, according to Zimbabwean media, VFEX market turnover rose 117 percent, going from US$26.3 million in 2023 to US$57 million in 2024. Market capitalization increased by 6 percent to US$1.3 billion in 2025. In 2024, the number of trades increased by 31 percent.
Growth in turnover, however, does not translate directly into deep liquidity, or a market with high volume and a narrow bid-ask spread, where there are many buyers and sellers ready to execute trades at close-to-identical prices, which creates a deep market. While VFEX might not entirely fit the definition of a deep market, trades are not concentrated at the high and low extremes, with little activity in the middle, creating a barbell structure. VFEX offers a diverse range of securities, suggesting a multi-tiered market with top gainers and top losers showing wide price dispersion, with no evidence of a sharp drop in trading volume or liquidity at the extremes. It also includes a mix of asset classes and maturities to further avoid a barbell structure.
VFEX is a “frontier market,” an equity market in a developing country that is more advanced than the least developed countries (LDCs) but less developed than mainstream emerging markets. It is in that middle ground between LDCs and emerging markets, offering high long-term returns with somewhat higher risks and lower liquidity.
Implications for US-Zimbabwe Relations
For US investors and corporations, the principal advantage of VFEX is operational: securities are denominated and settled in US dollars or other convertible currencies, reducing currency exchange complexity. If repatriation procedures are credible, VFEX can serve as a cleaner channel for Zimbabwe exposure than local currency assets. This matters to frontier-market portfolio managers, diaspora-linked investors with US dollar resources, and corporations exploring strategic stakes in Zimbabwean firms with export earnings, such as mining, agribusiness, tourism, logistics, and energy services.
A key impediment to US investment or other business ventures in Zimbabwe has been the Zimbabwe Democracy and Economic Recovery Act of 2001 (ZIDERA), enacted on December 21, 2001 in response to political violence and democracy suppression in Zimbabwe in the late 1990s, which directs US executive directors at international financial institutions to oppose certain lending and debt relief to the Government of Zimbabwe unless certain specific conditions are met. Although it was not a blanket prohibition on private investment, it created an environment that led many American investors to adopt more conservative de-risking policies toward Zimbabwe. In September 2025, H.R. 5300, a bill to guide US foreign policy, was introduced in the House of Representatives. Section 303 of that bill repealed ZIDERA, but left significant conditions in place, including the requirement that Zimbabwe remit all outstanding arrears owed under the Global Compensation Deed, inflation-adjusted to the date of enactment, and compensation shall not be in the form of Zimbabwe-issued securities. While this bill (that has not yet been signed into law) represents a symbolic victory for Zimbabwe’s government, with an external debt of over $14 billion, the cash-strapped government is unlikely to be able to satisfy the conditions.
This matters because if American investors remain wary, VFEX might struggle to attract US currency even with the firewalls separating it from the domestic economy. If, on the other hand, VFEX becomes a credible, rules-based channel that attracts reputable foreign investment (including US-linked firms), it can create stable operating conditions, transparent regulation, and credible dispute resolution, providing a platform for pragmatic dialogue even when bilateral political relations are tense. Conversely, if VFEX is perceived as an institution that benefits a narrow elite, it will intensify skepticism in Washington and among US investors.
How to Get From Where We Are to Where We Need to Be
The following are some thoughts on how to attract greater US participation in VFEX without raising bilateral political tensions.
The Government of Zimbabwe should:
- Publish clear, routine data on currency repatriation timelines;
- Strengthen anti-money laundering and countering the financing of terrorism (AML/CFT) controls and communicate them clearly;
- Minimize discretionary rule changes;
- Provide transparent dispute resolution mechanisms for the Victoria Falls International Financial Services Centre (IFSC); and
- Prioritize and enhance investor experience (account opening, settlement, etc.) so that US intermediaries can assess operational risk.
US investors and intermediaries should:
- Treat VFEX exposure as a governance and operations problem, not merely an asset selection problem;
- Conduct enhanced due diligence on counterparts, beneficial ownership, and sanctions screening; and
- Consider phased entry (small allocations, co-investments, or sector-specific exposures with high US dollar earnings and strong disclosure.
US policymakers should:
- Clarify the permissible channels for compliant private investment; and
- Encourage transparency benchmarks on issues such as anti-corruption, governance, and disclosure to reduce de-risking behavior without signaling unconditional normalization.
VFEX appears to be a serious institutional attempt to solve a real macro-financial constraint: the difficulty of mobilizing long-term capital in an unstable currency environment. An equally unstable political environment further hampers it. If Zimbabwe can protect the exchange’s hard-currency rulebook, ensure predictable mechanics, deepen liquidity, and maintain the firewall between VFEX and the turbulent domestic situation, it could become a significant contributor to investment and export growth, and a potential bridge to more normal investment relations with US capital. Improvement of Zimbabwe’s economy could potentially lead to progress in resolving its domestic political problems. This, in turn, could lead to a pathway to normalization of the overall US-Zimbabwe relationship.
Featured image: Adobe Stock
The post Can the Victoria Falls Stock Exchange (VFEX) Revitalize Zimbabwe’s Economy? appeared first on Zimbabwe Situation.