Zimbabwe's ruling party said it will expel Old Mutual Ltd.
from its financial system, sowing confusion over the status of the insurance
giant in the country and what will happen next in the government's battle to
fix its chaotic currency system.
The highest decision-making body of the Zimbabwe African
National Union-Patriotic Front on Friday said it endorsed a decision to
"eject Old Mutual from the financial system" and to shut down the
country's biggest mobile-money platform, Ecocash. The institutions have caused
"runaway inflation through illegal parallel exchange-market rates,"
the party's acting spokesman, Patrick Chinamasa, said after the meeting in
Harare.
The government wants to stop companies from using
differences in the 175-year-old insurer's share prices in London, Johannesburg
and Harare to determine a potential forward rate for the currency. Measures
that were being considered included suspending Old Mutual's shares from the
local bourse, having the securities traded in dollars, or moving it to a
planned foreign-exchange based market, people familiar with the matter said
earlier this month.
"When they say it is ejected, I'm not sure what he
means," said Lloyd Mlotshwa, the head of equities at Harare-based IH
Securities. "I'm not sure it's a delisting yet, at this point it's a
confusing statement."
Chinamasa didn't give further details or respond to calls
and text messages from Bloomberg seeking comment.
The local stock exchange has been shut for two weeks after
security forces forced the government to cease trading and halt most mobile-money
transactions, people familiar with the matter said last month. Clive Mphambela,
a Treasury spokesman, declined to comment. A spokesperson for Old Mutual in
Johannesburg didn't respond to calls and a text message seeking comment. Nick
Mangwana, a government spokesman, didn't immediately reply to a text message.
A perennial shortage of cash means anyone who has banknotes
is able to negotiate exchange rates with brokers who pay the funds onto
mobile-money platforms. The brokers can then sell the hard cash at an even
higher rate. The Old Mutual Implied Rate values the Zimbabwean dollar at 122
against the greenback, compared with a black-market rate of about 100, and
Friday's closing price of 65.8765. The government in June abandoned a peg of
25:1 that was put in place in March.
Justin Bgoni, the chief executive officer of the stock
exchange, said he is aware of the comments from the ruling party, but wasn't
sure what it implied and would rather wait for official communication from
authorities before commenting.
Sean Gammon, managing director of Harare-based Imara
Edwards Securities Pvt Ltd. said the comments by Zanu-PF were probably directed
at delisting Old Mutual rather than its removal from the entire financial
services sector. Old Mutual spans banking, property and insurance in the
country.
The last communication received from authorities was that
inspections would be conducted into stockbroker trades in the coming days, he
said. Once concluded, trading should resume.
Bloomberg
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