Digital Banking and Capital Markets: Ethiopia’s Next Leap in Financial Inclusion

Ethiopia is on the cusp of a financial transformation. As the country inaugurates its first securities exchange and accelerates digital financial service adoption, a rare opportunity emerges: to fuse these two forces into a powerful engine for financial inclusion. If executed well, this convergence could democratize access to capital markets and reshape the country’s economic trajectory.  

A Digital Surge Meets a Nascent Market 

The launch of the Ethiopian Securities Exchange (ESX) in early 2025 marked a watershed moment. For the first time, Ethiopian enterprises can raise capital from the public, and citizens can invest in the formal economy. Yet, this development coincides with another transformation: the rapid digitization of the financial sector. 

With over 52 million Telebirr users and mobile penetration exceeding 80 million subscribers, Ethiopia is leaving traditional banking infrastructure behind. The government’s Digital Ethiopia 2025 strategy has catalyzed this shift, and banks are responding by investing in mobile-first platforms. 

How Digital Financial Services Support Capital Markets 

Digital banking and mobile money platforms are not merely about convenience—they are about access. In capital markets, they can play a catalytic role in expanding participation and reducing friction: 

• Online Trading Platforms: These democratize access to equities and bonds, allowing retail investors to participate without intermediaries. 

• Mobile Banking and Fintech Solutions: By lowering transaction costs and simplifying interfaces, they bring capital markets to the fingertips of everyday users. 

• E-KYC and Digital Identity: These streamline onboarding, especially for rural and unbanked populations. 

• Cross-Border Investment: Digital rails can facilitate diaspora investment and foreign portfolio flows into local markets. 

Ethiopia’s Digital Financial Service Experience: Michu and Telebirr 

Two local platforms illustrate the potential of digital finance to support capital market development: 

• Michu, a digital microloan platform, is expanding access to credit for SMEs and individuals. By enabling small-scale entrepreneurs to build credit histories and accumulate capital, Michu lays the groundwork for future retail investment. 

• Telebirr, Ethiopia’s dominant mobile money service, has already transformed how millions transact. Its integration with savings, bill payments, and potentially investment products could make it a gateway to the ESX for the masses. 

Global Lessons: What Ethiopia Can Learn 

Ethiopia is not starting from scratch. Other frontier and emerging markets offer valuable lessons: 

• Kenya: M-Pesa revolutionized mobile money. Its offshoot, M-Akiba, allowed citizens to invest in government bonds via mobile phones, with minimum investments as low as KES 3,000 (approx. USD 20). 

• India: Platforms like Zerodha and Groww have made stock trading accessible to millions, supported by Aadhaar-based e-KYC and UPI payment rails. 

• China: Fintech giants such as Ant Group and Tencent have enabled mass participation in capital markets through super apps that integrate payments, savings, and investments. 

These examples show that mobile-based capital market access is not only feasible—it is scalable, inclusive, and economically transformative. 

A Roadmap for Reform and Innovation 

Unlocking this potential requires more than technology. It demands coordinated action across regulators, banks, fintechs, and telecoms. A pragmatic roadmap might include: 

Policy and Innovation Roadmap 

To fully realize this vision, coordinated action is needed across several fronts: 

1. Regulatory Enablement 

The National Bank of Ethiopia (NBE) and the Ethiopian Capital Market Authority (ECMA) must work together to: 

• Develop interoperable digital ID and KYC frameworks. 

• Allow tiered investment accounts with simplified requirements for small investors. 

• Encourage API integration between banks, mobile money platforms, fintechs, and the ESX. 

2. Public-Private Partnerships 

Banks, fintech startups, and mobile money operators should collaborate to: 

• Build user-friendly investment interfaces. 

• Launch financial literacy campaigns targeting rural and youth populations. 

• Pilot mobile-based IPO subscriptions and bond offerings. 

3. Infrastructure Investment 

Continued investment in digital infrastructure, especially in rural areas, is essential. This includes expanding mobile network coverage, improving internet reliability, and ensuring cybersecurity. Building on these advances, two material areas of digitization are poised to further accelerate the democratization of finance. First, artificial intelligence is reshaping credit scoring and lending risk models, offering more inclusive and adaptive alternatives and leveraging Basel II and III lending risk models. Second, blockchain technologies are enabling the tokenization of financial and real-world assets, while also laying the groundwork for on-chain core banking infrastructure, creating new pathways for access, transparency, and efficiency across financial systems

Conclusion: A Digital Dividend Within Reach 

Ethiopia’s dual transformation—digital financial services and capital market development—offers a rare chance to rewrite the rules of financial inclusion. If mobile platforms can be harnessed to deliver investment access, the capital markets will not be the preserve of the elite, but a platform for shared prosperity. 

The question is no longer whether Ethiopia can build a capital market. It is whether it can build one that works for everyone.

The above article is part of a series of six commentaries written as part of a collaboration between Zuri Capital and Shega Media and Technology PLC. Reflections on Ethiopia's evolving financial ecosystem pertaining to key developments in banking, capital markets and economic policy will be covered in the series. Zuri Capital, formerly known as RiseAddis Investment Advisors, has been providing world-class corporate finance, transaction, and capital market advisory services for the past three years.