Ethiopia has inaugurated the Ethiopian Securities Exchange (ESX). This is the first securities exchange in Ethiopia since the closure of the Addis Aba
Ethiopia has inaugurated the Ethiopian Securities Exchange (ESX). This is the first securities exchange in Ethiopia since the closure of the Addis Ababa Stock Exchange in the 1970s, reinforcing Ethiopia’s commitment to modernizing its financial infrastructure.
The objective is to offer Ethiopian companies a platform to raise funds through the sale of shares. The launch aligns with Ethiopia’s broader strategy to open its economy to private and international investment and enhances investor confidence and fosters a robust investment environment.
Pros and cons
Initially, only Wegagen Bank, one of Ethiopia’s largest private banks, has been listed on the ESX. However, officials expect the number of listed companies to grow substantially over the next decade. Around 90 companies, including state-owned enterprises like Ethio Telecom, are expected to join the exchange, with the telecom giant preparing for an initial public offering (IPO). PM Abiy Ahmed emphasized the ESX’s role in empowering the private sector, attracting foreign investment, and diversifying funding sources.
“This exchange will help us to diversify our economy, bring in foreign investment, and empower our private sector to compete globally,” he said.
Financial analysts, such as Mark Bohlund from Redd Intelligence, pointed out that while the launch is a positive step, issues related to liquidity and market depth could limit foreign investment in the early stages.
However, the Ethiopian government is hopeful that the establishment of the ESX will ultimately support broader economic reforms, including the privatization of key state-owned enterprises and the expansion of the financial sector.