(Bloomberg) —

Zimbabwe plans to set up an offshore financial center in the resort city of Victoria Falls that the government hopes will emulate the likes of Dubai and the Isle of Man to attract foreign investment.

“The trigger is the success of the VFEX,” Finance Minister Mthuli Ncube said in an interview, a reference to the US dollar-denominated Victoria Falls Stock Exchange that’s attracting listings. “We want to compete with any offshore financial center in the world.” 

The project will “offer investors an environment comparable” to the Isle of Man, Mauritius and Dubai, he said.

Marc Holtzman, a US veteran banker with 35 years experience in emerging markets, has been appointed board chairman of the center. He is also chairman of CBZ Holdings Ltd., Zimbabwe’s biggest lender. 

Read more: Zimbabwe’s Dollar-Only Exchange Struggles to Win Over Foreigners

Holtzman will have his job cut out for him as the nation has been locked out of international capital markets since defaulting on payments to the World Bank, the International Monetary Fund and other multilateral lenders more than two decades ago. It owes more than $13 billion to creditors.

Regular dollar shortages have also scared off foreign investors as have targeted US sanctions against politically linked individuals and state firms for over two decades. The government claims the sanctions increase the country’s risk profile and make it difficult to attract foreign investment.

The financial center will be a hard-currency zone, based in US dollars, and offer tax incentives. Land has been set aside by the state to attract global banks to establish offices in the country, according to Ncube. The VFEX, which officially launched in October 2020, will be housed under the financial center.

‘Free to Choose’

“We need to bring confidence to investors that they won’t have difficulty in repatriating funds,” Holtzman said. 

Listings on VFEX have been attracted by the trade in US dollars, tax exemptions on capital gains and the ability to repatriate funds from a country where foreign exchange is in short supply. It now has eight traded businesses.

“Two more companies are coming and two more are seeking approval,” Justin Bgoni, the chief executive officer at VFEX, said Monday by text message.

Several of the listings are due to companies transferring from the Zimbabwe Stock Exchange, the main stock market in the capital, Harare, that trades in local currency. Authorities won’t attempt to dictate to firms which bourse to list on, as this is informed by their unique capital needs, Ncube said. 

“Companies are free to choose where to list,” he said. “I’m not too worried about companies moving across from the ZSE to VFEX.”

(Updates with Zimbabwe default in paragraph five and comment from Holtzman in paragraph eight)

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