The future of the Zimbabwe Stock Exchange (ZSE) is facing renewed scrutiny after financial professionals proposed sweeping reforms to restore investor confidence and arrest the migration of major companies to the US dollar-denominated Victoria Falls Stock Exchange (VFEX).

The debate has gained momentum following the voluntary delisting of several prominent companies in recent years, culminating in the departure of Econet Wireless Zimbabwe, formerly one of the ZSE's largest and most actively traded counters.

Financial mathematics student Tanaka Chikohwera argued that while the Reserve Bank of Zimbabwe (RBZ) is pursuing monetary stability through the ZiG currency, the steady migration of blue-chip companies to the VFEX risks reinforcing the economy's dependence on the US dollar and weakening the local currency capital market.

"While firms migrate to the Victoria Falls Stock Exchange in pursuit of foreign currency liquidity and fair valuation, the two-track financial system risks leaving the ZSE as an empty shell, potentially undermining the very economic stability we are striving to achieve," Chikohwera said.

His remarks come only weeks after the ZSE introduced temporary regulatory concessions under Practice Note 18, effective from June 1, 2026, aimed at stimulating listings and capital raising on the ZiG-denominated exchange.

The measures reduced the minimum market capitalisation requirement from US$10 million to US$1 million, lowered the free-float threshold from 30 percent to 10 percent, reduced the minimum public shareholder requirement to 50 investors and eased several capital raising and compliance obligations.

The exchange said the reforms are intended to encourage capital formation, broaden participation and reduce listing costs for companies, particularly small and medium-sized enterprises.

However, the concessions have prompted wider debate over whether easing listing requirements alone can address the structural challenges confronting Zimbabwe's capital markets.

Econet's departure remains central to that discussion.

The telecommunications giant cited persistent market undervaluation as a key reason for delisting, arguing that the ZSE had consistently failed to reflect the true value of both its telecommunications business and infrastructure assets.

The company subsequently transferred its infrastructure portfolio into Econet InfraCo, now listed on the VFEX, while the telecommunications business continues operating as a privately held company.

At the time of its exit, Econet represented roughly one-third of the ZSE's total market capitalisation and ranked among its most liquid counters, with significant holdings by pension funds, institutional investors and retail investors.

Financial analyst Takudzwa Ndoro previously questioned whether lowering listing thresholds adequately addresses the deeper problems facing the exchange.

"If a company of Econet's scale, market dominance and financial resilience concluded that the ZSE could not adequately value its business, what assurance exists that smaller companies entering under easier requirements will fare any better?" he asked.

He warned that unlike large corporates, smaller businesses may lack the financial strength and strategic flexibility to withstand prolonged undervaluation and weak trading activity.

Building on that debate, Chikohwera proposed several policy interventions aimed at improving valuation efficiency and strengthening the attractiveness of the ZSE.

Among the proposals is the introduction of standardised industry-specific valuation models by the Securities and Exchange Commission of Zimbabwe (SECZ) to better account for currency risk premiums and improve pricing transparency.

He also suggested tax incentives for pension funds that retain investments in companies maintaining local listings, arguing that institutional investors could play a larger role in supporting price discovery and market stability.

Other recommendations include expanding ZiG-denominated liquidity management instruments, introducing exchange rate-linked derivative products to hedge currency risk, and allowing companies to trade shares in the same currency in which they generate most of their revenues.

According to Chikohwera, firms earning predominantly in US dollars are disadvantaged when their shares are priced in ZiG because investors demand an additional currency risk premium that suppresses valuations.

Finance graduate Mlambo Ozineji supported the proposals, arguing that allowing multi-currency trading could remove what he described as an artificial valuation distortion.

"If a company earns in US dollars, pricing its shares in ZiG just adds an artificial risk premium that has nothing to do with the business itself," he said.

Ozineji also backed proposals to incentivise pension fund participation and argued that the ZSE and VFEX should operate as complementary markets rather than competitors.

Market commentators have similarly cautioned that regulatory concessions alone may not restore market confidence.

Sean Gammon noted that while the relaxed listing requirements simplify the listing process, weakening shareholder spread and liquidity standards risks producing companies that struggle to attract meaningful investor participation.

"Liquidity is the single most important element of investment return," Gammon said, warning that fragmented regulatory frameworks across Zimbabwe's exchanges may further complicate the investment landscape.

Research firm Morgan & Co has also described the concessions as recognition of increasing competition from the VFEX but cautioned that reducing compliance costs alone may not resolve underlying concerns surrounding liquidity, valuation efficiency and capital formation.

Analysts broadly agree that Zimbabwe's capital markets continue to face deeper structural challenges, including macroeconomic uncertainty, currency instability, constrained institutional liquidity and limited foreign investor participation.

Against that backdrop, the emerging debate suggests that while temporary regulatory concessions may broaden access to the market, long-term sustainability will likely depend on restoring confidence in the local currency, improving valuation mechanisms and creating conditions that encourage companies to remain listed on the ZSE.