Ethiopia, Kenya Agree to Potential Cross-Listing of Companies on Exchanges

Ethiopia’s maiden securities exchange has signed a Memorandum of Understanding (MoU) with its Kenyan counterpart and the i-Capital Africa Institute that will potentially allow cross-listing of companies on both exchanges. The partnership places special focus on promoting cross-border investments, knowledge exchange, and capacity building as part of enhancing financial markets across the broader East African region.

By leveraging the experiences of the Nairobi Securities Exchange (NSE), the third oldest in Africa, the management of Ethiopia’s Securities Exchange (ESX) looks to accelerate the growth of the pre-nascent exchange poised to launch soon.

Wongel Tamene, Senior Manager of Communications and Partnerships at ESX, expects the collaboration to provide key insights towards the creation of an inclusive and vibrant financial market capable of addressing investors’ needs. She pointed out the benefits of peering into methods employed by the NSE to create awareness of financial markets and inspire engagement from potential stakeholders.

“It is a crucial partnership,” Wengel told Shega.

She also highlighted the importance of understanding NSE’s experience over the past seven decades as an informative reference and a fundamental pillar to forming a strong regulatory foundation for potential cross-listings.

In line with these aspirations, the agreement outlines several initiatives, like joint training programs for market participants, a strong regulatory framework, and explorations into innovative financial products.

Research into cross-listing experiences within other African exchanges points to geographical proximity, market liquidity, and enabling governance as key factors.

A growing excitement has built up over the past year as ESX gets ready to launch potentially in mid-November with the possible listing of major state-owned enterprises. The unveiling of 100 million ordinary shares to the public by Ethio Telecom early in the week has further fueled the anticipation.

Tilahun E. Kassahun (PhD), CEO of the ESX, underscored the importance of Friday’s agreement with the NSE towards positioning Ethiopia as a key player in the regional financial landscape.

“It is a pivotal moment for the Ethiopian capital market,” he stated. 

Following ESX’s agreement back in August for an Electronic Trading Platform (ETP) and a Broker Back Office and Order Management System (BBOMS), the launch of the exchange appears imminent.

i-Capital Africa Institute was a key player in the signing of the agreement as it had previous relationships with NSE. Dagmawi Berhanu, Marketing & Sales Manager at the Institute, says they have been working on facilitating a potential partnership since the establishment of the Ethiopian Capital Market Authority (ECMA). He expects the cross-listing of companies to quickly follow the launch of the trading platform in Ethiopia.

 “The partnership has been two years in the making,” Dagmawi told Shega.