Prime Minister Abiy Rings Bell for Ethiopia’s Stock Exchange

Ethiopia’s second and energized go at capital markets kicked up in gear as the country’s securities exchange rang its inaugural bell on Friday afternoon. In a high-profile ceremony at the National Science Museum, Prime Minister Abiy Ahmed (PhD) heralded the unlocking of a new financial frontier for Ethiopians.

Anticipation has been building for the past year and a half, with the launch of Ethiopia’s Securities Exchange (ESX) initially set for mid-2024. Meanwhile, its establishment has been in the pipeline for six years, as part of the reforms under the Home-Grown Economic Reform Agenda (HGER).

"A fast-growing economy with immense potential and a dynamic trajectory toward prosperity" Abiy shared on X (formerly Twitter).

Several commercial banks have indicated plans to participate on both sides of Ethiopia's capital markets during their recent round of general assemblies. At least five state-owned enterprises managed by Ethiopian Investment Holding(EIH) are also expected to list on the new exchange with Ethiotel leading the way.

The launch of ESX is preceded by several critical reforms, like opening the banking sector to foreign investors, a shift towards a flexible exchange regime, and the re-establishment of the central bank on an autonomous footing. Less than 24 hours ago, the National Bank of Ethiopia signed a memorandum of understanding with ECMA outlining a collaborative effort for the issuance and depository of electronic securities, dematerialization of paper-based securities, and efficient clearing & settlement systems.

Following Ethiopia’s adoption of an International Monetary Fund economic program in late July, efforts at modernizing the financial sector have significantly accelerated.

Ethiopia’s first Initial Public Offering (IPO) was issued three months back as the state-owned telecom operator unveiled 100 million ordinary shares for a 10% stake. The IPO directive was approved a week later, while ECMA officially licensed ESX later in November.

ESX has indicated plans to list at least fifty companies in the coming five years as part of its short-term plan.