Ethiopia is on track to relaunch its stock market − Ethiopian Securities Exchange (ESX) − in November this year, 50 years since it was abolished, according to Hana Tehelku, the new head of the Ethiopian Capital Market Authority (ECMA).
Ethiopia’s sociálist revolution of 1974 led to the abolition of the country’s stock exchange. Over the years, however, economic liberalisation has been regaining pace under Prime Minister, Mr Abiy Ahmed, who has been in power since 2018.
Initially it was set to go live this October but the launch is understood to have been moved to November. The establishment of a bourse is part of Prime Minister Abiy Ahmed’s push to open up a country heavily controlled by the State to greater private investment.
All human resource and technological requirements for the bourse will be in place by October, the Ethiopian Securities Exchange CEO Tilahun Esmael Kassahun was quoted as saying by Fana Broadcasting. The ESX will be a key step forward in capital markets development in Ethiopia.
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At least 50 companies are expected to list when Ethiopia’s stock exchange launches. The country’s new $38bn sovereign wealth fund Ethiopia Investment Holdings (EIH) has been working with the Ministry of Finance and Nairobi-based FSD Africa to set up the Ethiopian Securities Exchange (ESX) to get it operating by end of 2024.
Abiy, the Prime Minister, said in February that the government was discussing the sale of 10% of state-owned telecoms company Ethio Telecom via the stock exchange. Ethio Telecom held a monopoly before a consortium led by Kenya’s Safaricom won the country’s first private telecoms licence and started commercial operations in 2022.
Ethiopia’s economy is still grappling with the legacy of being a command economy for decades, but Abiy’s push since 2018 towards more private sector involvement has been notable for being more ambitious than previous attempts at opening up.
In late July, Ethiopia floated its currency ahead of securing International Monetary Fund support, a step that needed to happen before a long-delayed debt restructuring could begin.
The Capital Markets Proclamation (No. 1248/2021) says the exchange will be established as a Share Company (public company in Ethiopian law) by Government in partnership with the private sector, including foreign investors. Between 25% and 55% of the ownership of the ESX will be for corporations, capital market intermediaries and operators of international securities exchanges, while Government will not own more than 25%. It will be a for-profit entity.
The exchange is designed to provide a fundraising platform for small and medium-size enterprises, which are the backbone of the Ethiopian economy. The exchange will also offer a platform for the privatisation of Ethiopia’s state-owned enterprises.
In the past few years, the Government has implemented several reforms to open the economy and the launch of a securities exchange will be a catalyst for attracting new investment from the private sector. The exchange will be a platform for the privatisation of Ethiopia’s state-owned enterprises and will help Ethiopian businesses, including small and medium-size enterprises to raise capital.
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