Zimbabwe’s market regulator is in discussions with the central bank regarding new regulations that mandate companies to report their financial statements in ZiG, the nation’s gold-backed currency. The move could force businesses to adopt hyperinflationary accounting, increasing operational costs.
Zimbabwe Stock Exchange (ZSE) CEO Justin Bgoni confirmed that the Securities and Exchange Commission is engaging with relevant authorities to determine the way forward.
Earlier this month, Reserve Bank of Zimbabwe Governor John Mushayavanhu directed all ZSE-listed companies to report in ZiG with “immediate effect,” including their audited 2024 financial statements. He justified the decision by citing the increasing volume of transactions settled in ZiG, which now accounts for 30% of all transactions, while the remainder is conducted in US dollars.
Since 2023, listed companies have been permitted to report in US dollars due to the currency’s widespread use and the instability of the now-replaced Zimbabwean dollar. Many firms, including beverage giant Delta Corporation, had already transitioned to USD reporting.
However, ZSE-listed FBC Holdings has warned that the new directive could create complications. In a recent client note, the financial institution highlighted risks such as accounting complexities, inflation-related challenges, investor uncertainty, and regulatory hurdles.
The move would also necessitate adjustments to accounting software, financial models, and auditing procedures, as well as compliance with International Accounting Standard (IAS) 29, which governs financial reporting in hyperinflationary economies. This would require frequent revaluations, adding to the financial burden on companies.
FBC Holdings has urged authorities to reconsider their stance, proposing a more flexible approach that allows businesses to choose the most relevant currency for reporting.
ZiG, introduced in April 2024, is Zimbabwe’s sixth attempt at establishing a stable local currency since 2009. However, it has already lost 95% of its value amid exchange-rate fluctuations, prompting authorities to devalue it in September.
Zimbabwe’s challenging economic landscape has recently led to the withdrawal of major global accounting firms, including Deloitte LLP and PwC LLP, from the country.
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