UNIVERSITY OF ZIMBABWE FACULTY OF COMMERCE DEPARTMENT OF BUSINESS STUDIES EVALUATION OF THE ROLES AND EFFECTIVENESS OF THE ZIMBABWE STOCK EXCHANGE (ZSE) COMPILED BY: JAMES VASHIRI R101557A SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR BUSINESS STUDIES HONORS DEGREE IN MARKETING-HBBS 4 (MARKETING) BY THE UNIVERSITY OF ZIMBABWE SUPERVISOR: MR. JD NHAVIRA HARARE, ZIMBABWE
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UNIVERSITY OF ZIMBABWE
FACULTY OF COMMERCE
DEPARTMENT OF BUSINESS STUDIES
EVALUATION OF THE ROLES AND EFFECTIVENESS OF THE ZIMBABWE STOCK EXCHANGE (ZSE)
COMPILED BY:
JAMES VASHIRI
R101557A
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR BUSINESS STUDIES HONORS DEGREE IN MARKETING-HBBS 4
4.5.4 Does the ZSE promote investment for small investors?..................................32
4.5.5 Does the ZSE promote growth for small to medium enterprises?...................33
Source: Raw Data....................................................................................................33
4.5.6 Is the Zimbabwean Capital Markets properly regulated?................................33
Source: Raw Data....................................................................................................34
4.5.7 How significant is the capital raising ability of the ZSE?................................34
4.5.8 What do you think should be done for the ZSE to be more effective in accomplishing its roles?...........................................................................................35
4.5.9 What recommendations do you expect this study to provide for the benefit of stock market development in Zimbabwe?................................................................35
Vashiri James R101557A Page vi
Evaluation of the roles and effectiveness of the Zimbabwe Stock Exchange (ZSE)
4.5.10 How effective is the ZSE in promoting economic growth and development?.................................................................................................................................35
4.5.11 Can companies rely on the ZSE for capital raising for project development?.................................................................................................................................36
4.5.12 Has there been any change for the better in terms of the effectiveness of the ZSE since the introduction of the multicurrency regime?........................................36
5.5 Suggestions for Further Research.......................................................................42
5.6 Summary of Conclusions and Recommendations..............................................43
List of Abbreviations and Acronyms
ZSE Zimbabwe Stock Exchange
RBZ Reserve Bank of Zimbabwe
JSE Johannesburg Stock Exchange
LSE London Stock Exchange
Vashiri James R101557A Page vii
Evaluation of the roles and effectiveness of the Zimbabwe Stock Exchange (ZSE)
King Report South African code of best practice on Corporate
Governance
GDP Gross Domestic Product
CEO Chief Executive Officer
SEC Securities Exchange Commission of Zimbabwe
IPO Initial public Offering
IPO Where a company issues shares to the public for the
very first time.
SMEs Small to Medium Business Enterprises
Vashiri James R101557A Page viii
CHAPTER I
1.0 INTRODUCTION
1.1 Introduction
As the activities on the stock exchanges tend to be specialized and not understood
by common people, this chapter gives some basic definitions and review stock
exchange history, participants, operations and importance, A brief background of
the Zimbabwe Stock Exchange was explored in this chapter
The chapter also highlights objectives, research questions limitations and
delimitations, hypothesis to be tested and the assumptions adopted in carrying out
the study.
1.2 Background of the study
2.2 Definition of Stock Exchanges
A Stock Exchange is a market where stocks and shares are purchased and sold
and capital is raised for the purposes of industry and both local and central
government.1
2.3 History of Stock Exchanges2
Markets for the trading of stocks and shares or securities have existed for
centuries all over the world. One of the earliest known markets was established in
Paris, France around 1138.3 However, the modern form of the Stock Exchange
can be traced to about 200 years ago.4 .
1F. E. Armstrong 1957 The Book of The Stock Excliange, London: Pitman: p 17.
2 Wikipedia, the free encyclopedia
3 E. H. H. Edwards 1963 "The Role of the Stock Exchange", in RSE, Financial and Economic Symposium, Record of Proceedings, Salisbury: p 3
4 W. T. C. King 1954 The Stock Exchange, London: Allen & Unwin: p 15
Vashiri James R101557A Page 13
2.3.1 History of the Zimbabwe Stock Exchange
Trading of stocks and shares in Zimbabwe can be traced back from1891, when the
first stock-broking firm was opened.5The first Stock Exchanges were set up a few
years later in 1894 in Salisbury and Bulawayo. Later, two other exchanges
emerged in Gwelo (now Gweru) and Umtali (now Mutare) around 1898. These
exchanges were intended to meet the capital needs of the gold mining industry,
whose rapid expansion was fuelled by rumors of a 'Second Rand' in Southern
Rhodesia. As the hope of the Second Rand faded the mining companies withdrew,
the local stock markets collapsed. By 1902, all the local Exchanges had ceased to
operate. The Rhodesian Stock Exchange (RSE) was re-established in Bulawayo in
1946.6 By 1980, the ZSE was a highly specialized market, however as a result of
global recession; there was a dramatic fall of the industrial and mining indices on
the Exchange. However, between 1984 and 1990, the ZSE's performance
improved considerably. The industrial index shot up from 150 in 1984 to 2 732 in
1991, while the mining index jumped from 28 to 500 between 1984 and 1990.
This was due to the restored confidence among the investors that colonial
property rights would be upheld. To date, the history of the Stock Exchange in
Zimbabwe has received little scholarly attention although some economic
analyses exist. However, their focus has been, invariably, on illustrating the
highly speculative character of the gold mining industry in the country and not on
the Exchanges themselves. There is, thus, need for a scholarly study of the history
of the Zimbabwe Stock Exchange, which has played a very important part in the
recent history of Zimbabwe.
1.3 Statement of the Problem
5 The Rhodesinn HeniUi, 29 October 1892
6 George Karekwaivenani, A History of the Rhodesian Stock Exchange, p 2
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Small business enterprises are having difficulties raising enough capital to finance
their operations. The most effective way to do so is by Initial Public Offerings yet
the ZSE requires specific levels of profitability and about three years of trading
history for a company to do so7. As much as this is meant to protect investors it is
compromising economic growth.
Zimbabwe is lagging behind on the disclosure of executive remuneration which is
a deficiency in corporate governance as witnessed by the United States of
America (USA) corporate scandals of 2000s and the Zimbabwean scandals of
2004 in the banking sector that saw not less than ten Banks placed under
curatorship and two under liquidation8. Board compositions of some listed
companies are not up to standards that good corporate governance practices
would want them to be. It is up to the ZSE to incorporate the practices in their
Listing Rules9
Indigenization laws of the ZSE is discouraging foreign investors. The Chief
Executive Officer (CEO) of the ZSE, Emmanuel Munyukwi believes that the
2010 financial year would have been a better year had it not been for the
indigenization regulations gazetted in March 2010. Munyukwi said:
“In April we raked in about US$5 million while months before that we were raking in more than US$20 million a month. Since the regulations were gazette, we have seen a negative impact on trade………..”“Last year our market was driven by foreigners, making up to about 45 -50% of the total turnover of about US$200 million on the ZSE,”10
7 Gilbert Muponda, 1 June 2008
8 Dr. Gono, Troubled Banking Institutions Handout, p 2
9 Willia Bonyongwe, August 2010
10 Zimbabwe Daily News, 29 December 2010
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The indigenization laws as observed by Munyukwi clearly negatively impacts the
growth of the economy by dispiriting profitable trading at the ZSE.
Foreign investors improve the inflow of foreign exchange, which is often greatly
needed in developing countries to finance imports and other foreign payments11.
However, whilst foreign investors are important for emerging markets, the
currency crises of East Asia (1990s) brought doubt that such investment flows
generate benefits for developing countries12.
1.4 Research objectives
The primary objective of the study was to assess the effectiveness of the
Zimbabwe Capital market (ZSE) in accomplishing its roles. In line with the major
objective, the project also attempted to pursue the following subtopics:
Assessment of the ZSE’s performance in ensuring good corporate
governance among Zimbabwean companies;
Analyzing the extent to which the ZSE assist small enterprises grow;
Assessing the effectiveness of the ZSE in promoting economic growth
and development;
Establishing whether companies can rely on the ZSE as a source of
financing operations;
1.5 Research Questions
The major question the researcher attempted to answer was whether the capital
market is effective in accomplishing the roles that it is supposed to? The
following questions were also asked:
What is the best strategy in addressing the shortcomings that the
Zimbabwean capital market (ZSE) has as a way of raising capital among
other roles?
11 Jefferis, 1995; Doidge et al., 2004
12 Bhagwati, 2001; Gabriele et al., 2001
Vashiri James R101557A Page 16
Has there been any change or improvement on the performance of the
Zimbabwean capital market in accomplishing its roles ever since the
introduction of the multi-currency regime in February 2009?
Is the capital market heavily regulated?
Does the capital market help firms to raise funds for new projects?
Does the capital market adequately support start-up firms?
1.6 Statement of Hypotheses
With respect to the research objective of determining whether the ZSE is effective
in accomplishing is roles, the hypotheses to be tested is as follows:
Ho: The Zimbabwe capital market (ZSE) is effective in accomplishing its roles.
H1: The Zimbabwe capital market is not efficient in performing its roles.
1.7 Importance of the study
The major significance of the research was to spell out the weaknesses and or
strengths of the Zimbabwe capital market and provide solutions thereto. The
research project shall enable companies to make an assessment of the method of
raising capital that they can use having evaluated the past, current and the
expected performance of the Zimbabwe Capital market, the Zimbabwe Stock
Exchange to be more precise. Small and medium enterprises will be able to resort
to some methods of raising finance for their demanding working capital needs and
also the ZSE if the recommendations of the study are adopted.
The project will enable the researcher to have a better understanding of the
Zimbabwe Capital market, ZSE. He will gain a thorough knowledge of how the
ZSE operates, its institutional weakness, current developments that are happening
to the capital market, the instruments traded through the capital market and be
able to identify gaps that need particular attention. Besides gaining knowledge
about the ZSE, the researcher also gain the necessary experience for research
projects in further studies.
Vashiri James R101557A Page 17
The country shall also benefit from the research project. This is because the
research is aimed at ensuring that the ZSE is functionally effective. If the capital
markets becomes effective it leads to improved economic growth and
development and ultimately improved standards of living which is perceived to
lead to political stability.
The research results are also expected to improve the spirit of enterprise and
better corporate governance that will improve the status of the ZSE in the world
of investment. This will see an improvement in capital inflows which had dropped
drastically over the last decades because of political insecurity and indigenization
laws.
Good governance is also expected to reduce regulatory expense on the part of the
government. As noted by Magayisa, the corporate scandals of 2004 cost the
Reserve Bank of Zimbabwe a lot in trying to rescue the Troubled Banking
Institutions. The results of the research, if implemented are expected to result in
self regulatory markets that are both efficient and effective and possibly dilute the
monopoly status of the ZSE.
1.8 Assumptions of the study
All the Zimbabwe capital market trading is done through the Zimbabwe
Stock exchange (ZSE) and therefore the phrase capital market and ZSE
shall be used interchangeably;
The sample used is a true representative of the population;
All questionnaires will be responded to;
All interviews will be successful;
All the seventy seven listed companies on the ZSE use the capital market
as the sole method of raising capital;
Any company can be listed easily on the ZSE;
Companies across all industries can switch from one method of raising
capital to another.
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1.9 Scope of the Study
In line with the research objectives, the scope of this study is restricted to the
following
areas:
Assessment of the ZSE’s performance in ensuring good corporate
governance among Zimbabwean companies;
Assessment of the extent to which the ZSE assist small enterprises grow;
Assessment of the effectiveness of the ZSE in promoting economic growth
and development;
Assessment of whether companies can rely on the ZSE as a source of
financing operations;
Assessment of the extent to which the ZSE facilitate raising of capital for
both the government and nongovernment corporate;
The research project will be confined to the roles and effectiveness of the
Zimbabwe capital market (ZSE) considering the currently listed companies. The
main focus of the research is on the effectiveness of the ZSE in accomplishing its
roles.
1.10 Time budget
Table 1: Time Budget
Chapter Allocated Time Due Date
Project proposal One week 13/12/2010
Chapter 1(Introduction) One month 21/01/2011
Chapter2(Literature review) Three weeks 15/02/2010
Chapter 3(Methodology) One month 14/03/2011
Chapter4(Research Findings) Two weeks 28/03/2011
Chapter 5(Conclusion ) One month 30/04/2011
1.11 Monetary Budget
The research will be carried out within the budget below:
Vashiri James R101557A Page 19
Table 2: Monetary Budget
Item of Expenditure Cost (USD)
Tuition fees $315.00
Internet $20.00
Printing $30.00
Transport $40.00
Accommodation for field research $50.00
Total cost $455.00
1.12 Limitations
The major limitations that the researcher encountered in the course of the research
are as follows:
Financial constraints for field research
Limited time within which the research was carried out
During field research some people were not willing to dedicate their selves
to supporting the project
However, to overcome such limitations and problems the researcher made the best
use of the available financial resources and time. The researcher prepared a
financial and time budget to ensure that the quality of the research outcomes was
not affected by such constraints.
Challenges in field research were overcome by making prior arrangements and
appointments with the people with whom interviews were going to be held. The
researcher also took his time explaining the benefits and importance of the
Vashiri James R101557A Page 20
research project to them. The researcher made it clear that the research is not to
his benefit only.
1.13 Summary
As the activities on the stock exchanges tend to be specialized and not understood by common people, this chapter gives some basic definitions and review stock exchange history, participants, operations and importance, so as to serve as the basis for understanding how the stock market can help promote investment and trade. A brief background of the Zimbabwe Stock Exchange was explored in this chapter.
CHAPTER II
2.0 LITERATURE REVIEW
2.1 Introduction
The chapter seeks to discuss theoretical and empirical literature concerning the
roles of stock exchange in relation to the ZSE. In line with the research questions
the chapter will explore the roles that Zimbabwe Stock Exchanges are expected to
perform. The ZSE’s performance would be compared with roles performed by
other stock exchanges around the world like the JSE.
2.2 ZSE functions13
The ZSE serves three critical functions:
mobilize and efficiently allocate resources for the country's economic
development
13 http://www.zse.co.zw/
Vashiri James R101557A Page 21
provide a fair, efficient, transparent and secure price discovery
mechanism in a well regulated environment
build liquidity through innovation
2.2.1Raising capital for businesses:
The Stock Exchange provides companies with the facility to raise capital for
expansion through selling shares to the investing public.
The Stock Exchange therefore is an organized financial platform that deals in
transactions involving the buying and selling of financial securities.
2.2.2 Mobilizing saving for investment:14
When people draw their savings and invest in shares, it leads to a more rational
allocation of resources because funds, which could have been consumed, or kept
in idle deposits with banks, are mobilized and redirected to promote business
activity.
2.2.3 Creating investment opportunity for small investors:
As opposed to other businesses that require huge capital outlay, investing in
shares is open to both the large and small stock investors because a person buys
the number of shares they can afford. Therefore the Stock Exchange provides the
opportunity for small investors to own shares of the same companies as large
investors.
2.2.4 Government capital- raising for development projects:15
Governments at various levels may decide to borrow money in order to finance
infrastructure projects such as sewage and water treatment works or housing
estates by selling another category of securities known as bonds. These bonds can
14R. R. West and S. M. Tinic 1971 The Economics of the Stock Market, New York: Praeger: D
15 George Karekwaivenani,Department of Economic History, University of Zimbabwe, P 8
Vashiri James R101557A Page 22
be raised through the Stock Exchange whereby members of the public buy them,
thus loaning money to the government.
2.6.8.1 Remark 2
The ZSE falls short of some of the functions that other stock exchanges around the
world do perform. Among the listing requirements of the ZSE should be the need
by companies to comply with international codes on corporate governance like
the King Report on corporate governance. The JSE adopted the King II guidelines
on corporate governance among its Listing requirements.
2.3 Performance Review of Zimbabwe Stock Exchange
Contrary to the noble purpose for which the ZSE was created, the ZSE has
literally galloped astray, in the process creating obscene paper wealth that is
causing havoc in the economy.16 By 2008 the Zimbabwe Stock Exchange had
become the most devastating vehicle of economic destruction, there was rogue
trading at the ZSE:
The ZSE allowed some stock brokers to falsely bid up share prices, when
in fact the same stock brokers had absolutely no money to pay for the
shares. The end result has been that some counters grew by as high as 2
million percent in a single day;
Where share prices were rising at the ridiculously bloated rates, what that
effectively meant was that someone could work up with no penny at the
bank, but end the day a multi-trillionnaire. The next morning, the false
wealth so created would show up as high demand for cash.
The Stock Exchange was deliberately indexing the entire stock market to
the spurious Old Mutual share prices. The whole economy was then being
priced via the Old Mutual rate whose share price movements had no
16 Press statement on the rampant fraudlent activities on the ZSE, Dr. G. Gono governor reserve bank of zimbabwe 20 november, 2008, pp 6-9
Vashiri James R101557A Page 23
relationship with economic fundamentals, let alone actual corporate
performance of Old Mutual itself.
The Zimbabwe Stock Exchange had been operating with no strict rules
and regulations that prohibit rogue behavior. On numerous occasions,
company share prices rose astronomically with absolutely no actual
volumes trading;
Some stock brokers were buying shares cheap in the morning call overs
then drive up prices before off-loading the same shares on the same day at
inflated prices;
CHAPTER III
3.0 RESEARCH METHODOLOGY
3.1 Introduction
Research methodology refers to the systematic, focused and orderly collection of
data for the purposes of obtaining information in order to solve research
questions. Data collection and analysis procedures are central to the validity of the
research findings in so much that it determines the success (or failure) of the
study. This chapter outlines the research design adopted, the research population
and sample, data collection method and instruments and the data presentation and
analysis plan. The chapter also explains the rationale for and shows why a case
study research methodology was deemed appropriate for this study.
3.2 Research Design Adopted
A case study research methodology was deemed appropriate for this study. A case
study is a detailed and thorough investigation of a few cases. “It is an intensive
description and analysis of a phenomenon or social limit such as an individual, a
group, an institution or community”.
Vashiri James R101557A Page 24
3.2.1 Rationale for Case Study Approach
A case study method can contain several case studies and could use multiple
sources of evidence17 including documents, interviews and observations. It also
allows for the utilization of both qualitative and quantitative approaches and is
thereby seen as being more advantageous. Moreover, since these study intents to
deal with a management and administration phenomenon, it became logical to
adopt a case study approach.
The other advantage of the method is that a case study approach is rich in details
and well defined. It therefore becomes immediately useful in gathering detail.
However, despite these advantages, case studies have received criticisms. Case
studies are often accused of lack of rigour. Too many times, the case study
investigator has been sloppy, and has allowed equivocal evidence or biased views
to influence the direction of the findings and conclusions.
3.2.1 Design of Case Study
Research design is the plan and structure of investigation so conceived as to
obtain answers to the research questions18. The researcher adopted a multiple-case
design because of the need to provide evidence in addressing the issue in
question. The research used a case study approach, which is exploratory, carried
out about the ZSE’s effectiveness in accomplishing its roles and functions.
Empirical data was obtained from different sources through sampling,
questionnaires, structured and unstructured interviews, and secondary data from
reports and recommendations derived from the various stock brokers, asset
management companies and the Zimbabwe Stock Exchange.
17 Yin, 1993, p3
18 Kerlinger, (1996) p 279
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3.3 Data Collection
Data collection is a term used to describe a process of preparing and collecting
data, for example as part of a process improvement or similar project. The
purpose of data collection is to obtain information to keep on record, to make
decisions about important issues, to pass information on to others.
In this research the researcher collected data from both primary and secondary
sources. Primary data can be defined as data which can be collected directly from
target respondents whereas secondary data can be collected from publications of
various institutions such as textbooks and newspapers.
3.3.1 Primary Data
Primary data is observed or collected directly from first-hand experience. It can
be defined as data which is collected directly from target respondents. In this
research primary data was gathered through questionnaires, face-to-face
interviews and telephone interviews.
3.3.1.2 Telephone interviews:
Telephone interviews allowed the researcher to cover a wide geographical area
within a short period of time. Instant responds to the questions were given. The
use of telephone interviews enabled the researcher to conduct unstructured
interviews which is critical as it gives the respondent chance to express their
opinion without the bias that is always associated with personal and face to face
interviews.
Telephone interviews had advantages as follows:
The researcher could cover a wide geographical area within a short space
of time
The costs were less than those of conducting personal interviews
Gives instant responses as opposed to questionnaires
Vashiri James R101557A Page 26
However, telephone interviews had the following drawbacks:
Time for detailed discussion was limited
More costly than questionnaires
3.3.2 Secondary Data
Secondary data is that which is already available prior to a study because it was
collected for some other purposes some other time, not for solving the current
problem. To gather the data, the researcher went through already existing records,
statistics and other publications. Other sources of secondary data included the
press, newsletters by investment companies and stock broking firms and the
Internet.
3.4 Sampling
Sampling is the way sample elements are to be selected from the entire population
to come up with ‘representative’ samples19. The need to sample arises when the
entire population cannot be surveyed because either of budget constraints,
practically impossible, or time constraints20..
There are two basic methods of sampling, namely21:
Probability or representative sampling
Non probability or judgmental sampling
Probability samples are so called because it is possible to express the
mathematical probability of sample characteristics being produced in all
population. Each element in the population of interest has an equal chance of
being part of the sample.
In non-probability sampling, the researcher uses his subjective judgment to come
up with sampling method that he feels will deliver results and enable him answer
19 Hill, et al., 2003
20Saunders et al. 2003
21 White ,2000 and Hill et al. 2003
Vashiri James R101557A Page 27
the research question. This is particularly so where the data to be collected is
qualitative22.
Because of the qualitative nature of this research, non-probability sampling
techniques were used to select the sample.
The selection of the researcher’s target population was on the basis of knowledge,
flexibility, availability and convenience. The targeted population included credit
analysts, dealers, and other ZSE personnel.
3.4.3 Sample Size
Deciding on a sample size for a qualitative enquiry can be more difficult than for
a quantitative one because there are no rules to be followed23. It all depends on
what will be useful, what will have credibility and what can be done within
available time and resources. There is always a difficulty in striking a
compromise between the accuracy of the findings and the amount of time and
money available for collecting, checking and analyzing the data24.
To validate meaningfulness of insights generated from qualitative enquiry, have
more to do with the information richness of the case selected and the analytical
capabilities of the researcher than with sample size.
This research study had two populations or sampling frames. One population was
ZSE personnel. The other population was that of dealers and other employees of
stock broking firms and investment banks.
3.5 Data Analysis Plan
Due to the inherent noisy nature of raw data, questionnaire entries have to be
processed before being applied into any analytical models. Data processing
involves coding responses using numeric symbols, classifying respondents into
22 Patton ,1990
23 According to Mugo, 2005
24 Saunders et al ,1997
Vashiri James R101557A Page 28
individual groups as well as adjusting for non-responses. To make a reasonable
conclusion about the topic, there is need to find systematic and justifiable ways to
analyze data and draw sound conclusions and recommendations. The data will be
analyzed by sorting it out into categories. Answers will be grouped by question in
order to draw numbers and percentages of the number of respondents whose
responses fall in a certain category.
3.6 Summary
In this chapter, the researcher identified the research methodology and outlined
the approaches used in carrying out the research, the sampling technique and the
data gathering instruments employed in making this research study a success. The
next chapter shall look at the data presentation and discussion or analysis.
Vashiri James R101557A Page 29
CHAPTER IV
4.0 DATA PRESENTATION AND ANALYSIS OF RESULTS
4.1 Introduction
The chapter focuses on presentation techniques, discussion and interpretation of
research findings. It presents the data obtained through primary and secondary
means, the analysis and discussion of such data is in line with the research
objectives outlined in Chapter I. Specifically it presents results and analysis of
questionnaires, sampled data and results from the print media. The researcher
present and analyze the data collected from field research carried out in an
attempt to determine whether Zimbabwean Stock Exchange is effective in
accomplishing the roles that capital markets are expected to perform. The results
of the analysis are presented diagrammatically and expressed in percentages for
ease of assessment. The hypothesis, “Zimbabwean Capital Markets is effective in
accomplishing its roles” is tested. The research conclusions shall be based on such
analysis.
4.2 Response Rate
From the thirty five questionnaires distributed, nineteen were received back to
give a response rate of 54.30 % but three of the questionnaires received were
incompletely filled to such an extent that they were deemed spoiled thus reducing
the effective response rate to 45.70%. The response rate would have been higher
had respondents been given additional time to submit their responses but however
due to time constraints the 45.70 % response rate is accepted as being adequate
Vashiri James R101557A Page 30
for this study. The response rate was also low due to the time and monetary
budget of the researcher.
4.4 Comparison of Sample Percentage with Expected
Seventy five percent of the respondents surveyed indicated that the ZSE is not
effective in accomplishing the roles of capital markets.
Figure 6: Comparison of sample percentage with expected
Yes (4)25%
No (12)75%
ZSE is effective in accomplishing its roles
Source: Raw Data
4.5 Data Presentation
The following analysis is based on questionnaires collected at the end of the
project. The questions asked are basically the same for all respondents.
4.5.1.0 Questionnaire Response Review
4.5.4 Does the ZSE promote investment for small investors?
About 100% of the respondents believed that the ZSE adequately promote
investment and growth of small investors arguing that shares can be transacted in
lots of 100 for all listed counters.
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4.5.5 Does the ZSE promote growth for small to medium enterprises?
40% responded to this question agreed that the ZSE promote growth for small to
medium enterprises. However 60% of the respondents belied that the ZSE does
not adequately support small entrepreneurs to grow. The majority argued that the
requirements for small entrepreneurs to be able to list and issue shares through
initial public offerings (IPOs) were too much. For a company to be able to do that
it is required to have a trading history of about three years and showing some
levels of profitability. Some small entrepreneurs with brilliant ideas therefore fail
before they even launch their ideas because of lack of funding.
Figure 11: Does the ZSE promote Growth
ZSE Promotes Growth; 30%
ZSE does not Promote growth; 70%
Does the ZSE promote small entrepreneurs' growth?
Source: Raw Data
4.5.6 Is the Zimbabwean Capital Markets properly regulated?
50% of the respondents believed that the ZSE is heavily regulated especially
concerning foreign investors and selected sectors like the mining counters. They
believe that the introduction of SEC would, in the long term, enhence the ZSE’s
performance in relation to regulation. 45% of the respondents believed that the
ZSE is properly regulated. 5% were indifferent as to whether the regulation
currently prevailing affect the ZSE’s effectiveness.