Ethiopia's stock market debut set for November as PM Abiy hails it a "game-changer"

Ethiopia is on the verge of a major economic shift as it prepares to unveil its first stock market after over three years of extensive planning and groundwork.

Set to be launched in November 2024, the Ethiopian Securities Exchange (ESX) will be a major breakthrough drawing significant investors and funds.

said Ethiopia’s progress toward opening its capital market represents a fundamental transformation in its economic landscape.

“The introduction of a stock market in Ethiopia is poised to be a game-changer, supporting the country in achieving its growth aspirations and attracting new capital. This marks an exciting chapter for the nation,” he said.

According to Addis Standard, the journey towards this milestone began in 2021 when a macroeconomic advisor at the National Bank of Ethiopia Meles Minale, was appointed to lead a team of 14 experts in laying the foundation for Ethiopia’s capital market.

Their efforts led to the establishment of the Ethiopian Capital Market Authority (ECMA), headed by Brook Taye who is an experienced economist from the Ministry of Finance and the private sector.

The ECMA's tasks included developing a regulatory framework, creating a long-term capital market roadmap, and reviewing regulations and policies crucial for the Ethiopian Securities Exchange (ESX).

Speaking during a workshop on June 6, 2023, Taye, said the ESX will serve as a “key part of a functioning Ethiopian capital market ecosystem.”

He emphasised that ECMA was “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.”

Ethiopian Investment Holdings

The Ethiopian Investment Holdings (EIH) is also expected to be a major investor in the ESX. According to Addis Standard, in October 2023, EIH and four large state-owned enterprises (SOEs) announced a combined 25 per cent stake in the ESX, contributing 275 million birr (Sh 613 million).

The enterprises included; Ethiopian Shipping and Logistics Services Enterprise (ESLSE), Berhanena Selam Printing Enterprise, Ethiopian Insurance Corporation (EIC), and Ethio Telecom.

Additionally, the ESX aimed to raise 625 million birr (Sh1.39 billion) from private entities.

Addis Standard also says several prominent private banks with significant capital holdings have already announced their equity investments in the ESX.

“For instance, Awash Bank emerged as the leading investor two months ago, acquiring shares valued at 70 million birr. Global Bank also contributed 50 million birr to the ESX’s capitalisation efforts,” the agency said.

It added that international interest has also been notable, with companies from Kenya, Nigeria, and South Africa showing strong investment intentions.

In April 2024, the Nigerian Exchange Group (NGX) acquired a stake in the ESX, although the amount was not disclosed. As of May 2024, the ESX had secured over 95per cent of its targeted one billion birr capitalisation, paving the way for its operations.

“As of one month ago, the ESX had successfully secured over 95 per cent of its targeted capitalization of one billion birr. This achievement paves the way for the exchange to officially commence operations,” the agency said.