The Dubai Gold & Commodities Exchange (DGCX) and Zimbabwe’s Victoria Falls Stock Exchange (VFEX) signed a memorandum of understanding that may lead to the establishment of a gold market in the African country.
Zimbabwe wants to open the exchange in a bid to create a reference market that will see miners offered competitive prices, said Justin Bgoni, chief executive officer of the VFEX.
“It is a holistic approach to the needs of gold miners,” Bgoni said in response to queries from Bloomberg. “They raise capital and we make it easy for them to sell.”
More than $1.5 billion of gold is smuggled out of Zimbabwe every year, much of it to Dubai, according to a report from research organization International Crisis Group last year. An exchange could make it easier to sell the metal legally and locally.
Other commodities may also be traded on the exchange, should they be established.
There is an “ultimate aim of establishing an international commodities exchange in Zimbabwe,” the exchanges said in a statement.
Zimbabwe is the second African country to seek an alliance with the DGCX. Earlier this year the Dubai-based exchange signed a memorandum of understanding with the Financial Markets Regulatory Authority in Sudan to boost gold trading between the two countries.