Zimbabwe is seeking inclusion in the MSCI Frontier Markets Index for its US dollar-denominated equities, in a move aimed at attracting international portfolio investors and increasing liquidity in its capital markets.
Zimbabwe Stock Exchange (ZSE) Holdings chief executive Justin Bgoni said MSCI had begun assessing the country’s market following engagements between the two sides, according to the Financial Gazette.
The initiative is expected to strengthen the international profile of both the Zimbabwe Stock Exchange and the Victoria Falls Stock Exchange (VFEX).
The VFEX, launched in 2020, has increasingly become the preferred platform for investors seeking exposure to Zimbabwean companies through US dollar-denominated securities.
Its growth has accelerated as confidence in local currency assets has remained fragile and companies have migrated from the older ZSE.
The VFEX overtook the ZSE in market capitalisation in April, following the delisting of Econet Wireless Zimbabwe from the main exchange.
Its market capitalisation reached USD 3.91 billion in June, nearly 40% above that of the ZSE, according to The Standard.
The shift reflects a broader preference for hard-currency investments in an economy that has experienced repeated currency instability and monetary reforms. Dollar-denominated securities offer investors greater protection against local currency depreciation, although they remain exposed to company-specific and market risks.
Zimbabwe’s authorities see MSCI recognition as a potential route to widening the investor base beyond domestic institutions and individual shareholders. Inclusion in a widely tracked international benchmark could encourage global asset managers and funds investing in frontier markets to consider allocating capital to the country’s listed companies.
MSCI’s Frontier Markets Index tracks large and mid-cap stocks across less-developed equity markets. Its benchmark covers approximately 85% of the free-float-adjusted market capitalisation in each constituent country.
The index had 246 constituents and a combined market capitalisation of about USD 204.9 billion as of September 30, according to MSCI.
However, securing inclusion will require more than a formal application or discussions with the index provider. MSCI evaluates markets on size, liquidity, and accessibility, including whether international investors can enter and exit positions efficiently, repatriate capital, and operate within predictable regulatory frameworks.
These requirements could prove challenging for Zimbabwe, where currency convertibility, settlement arrangements, liquidity, and regulatory uncertainty have historically discouraged offshore investors.
The country has also faced difficulties over the treatment of dual-listed companies and currency conversion rules. Such issues have contributed to concerns about the ability of foreign investors to move capital freely between markets.
The growing importance of the VFEX has nevertheless provided authorities with an opportunity to demonstrate progress. The exchange has attracted companies seeking access to US dollar capital and a more internationally oriented trading environment.
The MSCI initiative also comes as Zimbabwe seeks to deepen its financial markets and reduce reliance on domestic funding sources. A stronger international investor presence could improve trading volumes, support valuations, and make it easier for listed companies to raise capital.
For MSCI, the assessment will involve examining whether the country’s market infrastructure meets the standards expected by global institutional investors. The index provider conducts annual reviews of market classifications, considering economic development where relevant, investability, and accessibility.
Zimbabwe already has an MSCI Zimbabwe Index, but its current composition illustrates the scale of the challenge. As of October 30, the index had just one constituent, Delta Corporation, with a market capitalisation of about USD 773 million, according to MSCI.