Ethiopia Set to Launch Securities Exchange Next Year

ADDIS ABABA – Efforts to develop a financial market are underway as Ethiopia prepares to launch its first-ever securities exchange in 2024.

The development of the Security exchanges is part of what the government says is financial sector reform to foster an inclusive and robust financial ecosystem.

“The capital market will become a reality next year,” Prime Minister Abiy Ahmed said at the parliament.

It will provide every citizen an opportunity to invest in stocks of major companies such as Ethiopian Airlines, and enable startups to raise capital for their businesses.

“It will give additional gear for the growing economy,” the Prime Minister said.

The ESX is being developed as a share company owned by the government and the private sector, including foreign investors. 

The ESX project team, set up by the state-owned Ethiopian Investment Holdings (EIH), is in charge of the development work and schedules for a full-fledged securities exchange to be ready over the next year.

The Project Manager Michael Habte says it will deploy a “state-of-the-art electronic trading platform for the equity and fixed-income markets as well as an innovative alternative capital market that caters specifically to up-and-coming SMEs.”

He was addressing the opening day of a capacity-building workshop for representatives of the public and private sectors, potential investors, policymakers, and regulators.

It was organized with a view of strengthening the capabilities of key market participants, preparing potential issuers and investors for the ESX’s portfolio of instruments, as well as garnering support from key policy-making institutions and regulators.

“A thriving, deep, and liquid Ethiopian capital market will require the full support of valuable development partners to realize the catalytic development impact of a modern securities exchange as we embark on the launch of the Ethiopian capital markets,” Habte noted.

The sector regulator, Ethiopian Capital Market Authority (ECMA), has prepared much of the legal framework needed to govern the financial market.

At the workshop, its Director-General Brook Taye says the ESX will serve as a “key part of a functioning Ethiopian capital market ecosystem.”  

Brook further states that ECMA is “fully committed to supporting the launch of the ESX and will work closely with the ESX team as it becomes a full-fledged securities exchange over the next year.”

The Economic Commission for Africa (ECA) and FSD Africa co-organized the workshop during which experts from the National Bank of Ethiopia FSD Africa, Afreximbank, the International Growth Centre, NCBA Investment Bank, Old Mutual Investment Group, and the Pension Benefit Guaranty Corporation shared their experiences and insights.