Zim’s Zanu-PF seems to want Old Mutual out

Zimbabwe’s ruling party said it will expel Old Mutual 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 Zanu-PF said on Friday last week 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 spokesperson, Patrick Chinamasa, said in Harare.

The government wants to stop companies from using differences in the insurer’s share prices in London, Johannesburg and Harare to determine a potential forward rate for the currency.

Measures 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.

Lloyd Mlotshwa, head of equities at Harare-based IH Securities, said: “I’m not sure it’s a delisting yet. At this point it’s a confusing statement.”

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 spokesperson, declined to comment.

An Old Mutual spokesperson in Johannesburg didn’t respond to calls. Nick Mangwana, a government spokesperson, didn’t immediately reply to a text message.

A perennial shortage of cash means anyone who has banknotes can negotiate exchange rates with brokers who pay the funds on to mobile-money platforms. The brokers can then sell the cash at a higher rate.

The Old Mutual Implied Rate values the Zimbabwean dollar at 122 against the greenback, compared with a black-market rate of 100, and Friday’s closing price of 65.8765.

Justin Bgoni, CEO of the stock exchange, wasn’t sure what ZanuPF’s comments implied and would rather wait for official communication before commenting.

Sean Gammon, of Harare-based Imara Edwards Securities, said Zanu-PF’s comments were probably directed at delisting Old Mutual rather than removing it from the entire financial services sector. – Bloomberg