6 Years After OMIR Suspension, Old Mutual’s VFEX Move Rewrites Zim’s Capital Market Rules

By Newton M. Mambande

INTRODUCTION: CAPITAL FLIGHT OR CAPITAL REALIGNMENT?

HARARE – IN September 2025, Old Mutual Zimbabwe Limited announced the lifting of its self-imposed suspension from the Zimbabwe Stock Exchange (ZSE) through a strategic migration and dual-listing on the Victoria Falls Stock Exchange (VFEX). The move ends a six-year hiatus that began in June 2020, when Old Mutual, PPC, and SeedCo were suspended from the ZSE by the Securities and Exchange Commission of Zimbabwe (SECZim) and the Reserve Bank of Zimbabwe (RBZ).

The core issue was the “Old Mutual Implied Market Rate” – OMIR. Because Old Mutual was dual-listed in London, Johannesburg, and Harare, its ZSE share price was being used as a proxy to derive a parallel USD:ZWL rate. As ZWL inflation accelerated, the ZSE price surged, and regulators argued this was creating “price discovery distortions” and fueling inflation expectations. The suspension was meant to break that transmission channel.

From a financial economics perspective, this is not simply a change of trading venue. It is a textbook case of regulatory arbitrage, currency segmentation, and investor base optimization. For a financial services giant with $2.1 billion in assets under management, the decision reframes how Zimbabwean capital markets allocate risk, price long-term liabilities, and protect policyholders.

This article analyzes the migration through four lenses: market microstructure, asset-liability matching, behavioral finance, and institutional theory. More importantly, it explains why retirees, insurance policyholders, pension scheme members, shareholders, financial advisors, and insurance brokers stand to benefit—and why the public should understand the historical context behind Old Mutual Zimbabwe’s decision.

1. BUSINESS HISTORY AND GROUP STRUCTURE: OLD MUTUAL ZIMBABWE’S INSTITUTIONAL FOOTPRINT

To understand the significance of this move, we must first understand Old Mutual’s role in Zimbabwe’s financial architecture.

Old Mutual entered Zimbabwe in 1903 as South Africa Mutual and incorporated locally in 1965. For over 120 years, it has operated as a systemically important financial institution (SIFI). Today, Old Mutual Zimbabwe Limited operates through the following key subsidiaries:

1. Old Mutual Life Assurance Company – the largest life insurer with >600,000 policies
2. Old Mutual Insurance Company – short-term general insurance for motor, property, agriculture, and commercial risks
3. Old Mutual Funeral Services – funeral assurance, funeral parlors, and memorial services; a key product for mass market and group schemes
4. Old Mutual Finance – consumer and SME lending, bridging finance, and payroll-backed loans
5. Old Mutual Investment Group – asset manager for pension funds, unit trusts, and insurance reserves
6. Old Mutual Securities – stockbroking, wealth management, and corporate finance advisory
7. Old Mutual Properties – property investment, development, and facilities management
8. CABS – building society and retail banking operations
9. O’MARI – digital financial services platform for payments, savings, and micro-insurance

During hyperinflation (2007–2008), Old Mutual’s balance sheet acted as a shock absorber. It paid out policies in groceries and later in USD. During the 2016–2019 currency transition, it was caught between ZWL liabilities and USD-denominated assets.

The 2020 suspension was rooted in this mismatch and the OMIR controversy. The ZSE was trading in ZWL, while Old Mutual’s intrinsic value was benchmarked to USD due to its regional operations and offshore assets. By comparing the JSE/LSE price to the ZSE price, the market was implicitly calculating an exchange rate that diverged sharply from the official rate. Regulators feared this “OMIR” was leaking into goods pricing. The result: a ban that pushed Old Mutual into an OTC trading system and left 200,000+ shareholders without price transparency for six years.

That history matters. Old Mutual is not just a listed company. It is a custodian of intergenerational savings. Any decision it makes on where to list directly impacts the real value of pensions, insurance claims, funeral benefits, and the earnings of thousands of intermediaries.

2. FINANCIAL ECONOMICS FRAMEWORK: WHY VFEX, WHY NOW?

From a financial economics standpoint, the migration can be explained through three core principles:

A. Market Segmentation and Currency Neutrality
The ZSE trades in ZWL. The VFEX, established in 2020 and domiciled in the Victoria Falls Special Economic Zone, trades exclusively in USD. This creates two segmented capital markets with different risk-free rates.

By moving to VFEX, Old Mutual resolves the asset-liability currency mismatch and the OMIR problem that plagued it since 2020. Its liabilities to policyholders are increasingly USD-indexed. Its assets—equities, property, offshore funds—are USD- or hard-currency-linked. Listing in USD removes the incentive for arbitrageurs to use the share price to imply an exchange rate, because the price itself is now in USD. This is consistent with the Modigliani-Miller proposition: capital structure and listing venue should minimize the cost of capital.

B. Price Discovery and Liquidity
VFEX operates under a lighter regulatory regime, with T+3 settlement in USD, and allows 100% foreign ownership with free repatriation. For Old Mutual, this means:

1. Access to regional and global institutional investors who were previously barred by ZWL convertibility risk
2. Narrower bid-ask spreads due to USD liquidity
3. A market capitalization that better reflects NAV, improving the ability to raise capital

This addresses the lemons problem on the ZSE—where information asymmetry and currency distortion drove foreign investors out. VFEX restores signaling without the OMIR externality.

C. Regulatory Arbitrage as Value Creation
Arbitrage is not a dirty word in economics. It is the process of exploiting price differences to reach equilibrium. By migrating to a USD market, Old Mutual arbitrages between a constrained domestic market and an open internationalized market. The benefit accrues to all stakeholders because a higher, more stable share price lowers the company’s cost of equity and improves solvency ratios under IFRS 17.

3. WHO BENEFITS AND HOW?

1. Retirees and Pension Scheme Members
Zimbabwe has over $4 billion in pension assets. Most are managed by Old Mutual Investment Group. The biggest risk to retirees over the last decade was purchasing power erosion.

Migration to VFEX benefits retirees in three ways:

• Real Value Preservation: With the fund now valued and traded in USD, the unit price of pension funds will track a stable currency. This reduces the need for frequent revaluations and protects against ZWL devaluation shocks.
• Better Investment Options: A USD-denominated listing allows Old Mutual to allocate more pension assets into VFEX-listed USD instruments, offshore funds, and REITs via Old Mutual Properties, improving diversification and returns.
• Transparency: Daily USD price discovery gives trustees and members a clear view of fund performance—no more “estimated NAVs” or OMIR confusion.

2. Insurance Policyholders
Life assurance is a long-term contract. Policyholders care about claim-paying ability.

• Solvency Strengthening: A higher market valuation improves Old Mutual Life Assurance, Old Mutual Insurance Company, and Old Mutual Funeral Services’ solvency margin. Regulators require insurers to hold capital equal to 150% of liabilities. A stronger share price makes raising that capital cheaper.
• Product Innovation: With access to USD capital, Old Mutual can launch more USD-denominated life, funeral, and general insurance products through O’MARI and agency channels without currency risk.
• Confidence Effect: In insurance, trust is the product. A VFEX listing signals to 600,000+ policyholders that their 20-year policy is backed by a globally priced entity.
• Funeral Services Stability: For Old Mutual Funeral Services members, USD pricing protects funeral benefits from inflation. It ensures payouts cover actual funeral costs and allows expansion of funeral parlors and memorial services nationwide.

3. Shareholders
For the 200,000+ shareholders who have been in OTC limbo since 2020, this is liquidity restored.

• Price Discovery: The OTC price was opaque and distorted by OMIR speculation. VFEX provides continuous auction in USD, improving fairness.
• Dividend Repatriation: Foreign shareholders can now receive USD dividends without RBZ approval bottlenecks.
• Valuation Re-rating: Regional peers trade at 1.2x P/B on USD exchanges. The ZSE OTC traded at an implied 0.3x due to currency risk. Closing that gap creates shareholder wealth and improves Old Mutual Securities’ ability to raise corporate finance.

4. Financial Advisors
Financial advisors are the distribution backbone of Old Mutual Investment Group and Old Mutual Life Assurance. They benefit because:

• Credible Product Shelf: Advisors can now sell USD-denominated unit trusts, pension, life, and funeral products with a share price that is transparent and stable. This reduces client objections around currency risk and OMIR volatility.
• Higher Commissions & Persistency: Stable USD products improve policy persistency. Fewer lapses mean more trail commission for advisors.
• Wealth Management Growth: Through Old Mutual Securities, advisors gain access to VFEX equities, REITs, and offshore funds to build diversified portfolios for HNW clients.

5. Insurance Brokers
Brokers placing business with Old Mutual Insurance Company and Old Mutual Funeral Services gain directly:

Digital Enablement: Integration with O’MARI allows brokers to issue micro-policies and collect premiums in real time, reducing admin costs.

Stronger Underwriter: A better-capitalized insurer means faster claims settlement, higher capacity for large commercial risks, and guaranteed funeral payouts.

New USD Products: Brokers can now offer clients USD policies for vehicles, property, agriculture, and funeral cover without worrying about indemnity erosion.

4. WHAT THE PUBLIC SHOULD KNOW

This move is smart, but it must be understood in context to avoid misinformation.

First, this is not an exit from Zimbabwe. Old Mutual remains registered, taxed, and regulated in Zimbabwe by IPEC, SECZim, and the RBZ. The VFEX listing is a capital market decision, not an operational relocation. Jobs, branches, funeral parlors, and tax remain in Zimbabwe.

Second, VFEX was created to solve the OMIR problem. The government’s 2020 policy was to create a USD offshore financial center so that companies with hard-currency assets could list without distorting the ZWL market. Old Mutual is the anchor tenant that proves the model.

Third, there are risks to monitor. USD liquidity on VFEX is still thin. If trading volumes remain low, price volatility could persist. And the dual-economy problem remains: most Zimbabweans earn ZWL but now have a major institution priced in USD. Financial literacy will be key.

Fourth, precedent matters. When Old Mutual left the ZSE in 2020 over OMIR, it created a liquidity vacuum. Its return via VFEX may pull other suspended counters like SeedCo and PPC back, deepening the market.

5. THE BIGGER PICTURE: FINANCIAL ECONOMICS AND NATIONAL DEVELOPMENT

From a national perspective, Old Mutual’s move is a test of Zimbabwe’s financial intermediation efficiency.

By migrating to VFEX, Old Mutual aligns its funding base with its investment horizon. That means more 20-year USD bonds for roads, more REITs for housing, more equity for manufacturing, and more sustainable funeral benefit schemes. This is how financial markets graduate from trading to transformation.

It also signals that Zimbabwe is willing to create parallel market structures to accommodate different risk appetites and to eliminate distortions like OMIR. That is pragmatic, not contradictory.

CONCLUSION: A SMART MOVE, IF MANAGED WELL

Old Mutual Zimbabwe’s migration to VFEX after six years is not about abandoning the ZSE. It is about choosing the right market for the right liability and ending the OMIR distortion.

For retirees, it means pensions that hold value.
For policyholders, it means stronger guarantees.
For funeral plan members, it means dignified benefits protected from inflation.
For shareholders, it means transparency and liquidity.
For advisors and brokers, it means credible, sellable USD products and a stronger balance sheet to back them.
For the economy, it means a chance to rebuild patient capital.

The real test now lies in execution: market making, investor education, and ensuring that the benefits of USD price discovery trickle down to the ZWL earner through better products.

If managed well, this will be remembered not as the day Old Mutual left the ZSE, but as the day Zimbabwe’s capital markets grew up.

Newton M. Mambande is an entrepreneur and researcher with published scientific research scholarship in journals. He can be reached at newtonmunod@gmail.com or +263 773 411 103