Ethiopia has taken a major step towards economic growth and development with the relaunch of its stock exchange, the Ethiopian Securities Exchange, after a 50-year absence. This historic milestone was announced by Prime Minister Abiy Ahmed on Friday, who described it as a significant moment for the country’s economic and financial landscape.
The Ethiopian Securities Exchange was first established in 1960, but its operations were halted in 1974 following the takeover by a communist military government. This move had a negative impact on the country’s economy, hindering its potential for growth and development. However, with the relaunch of the stock exchange, Ethiopia is now on track to become a major player in the global market.
The launch of the stock exchange marks the government’s initiative to establish a domestic stock market, starting with the state-owned Ethio Telecom. This is a significant move as it will allow the public to invest in the company through an initial public offering of shares, which was announced in October. This will not only provide an opportunity for Ethiopians to become shareholders in their national telecom company but also create a more transparent and competitive market.
During the launch event, Ethiopian officials announced that Wegagen Bank, a private bank, was the first company to list on the exchange. Other founding members of the exchange include Ethiopian Insurance Corporation, Ethiopian Shipping and Logistics Services Enterprise, and Berhanena Selam Printing. Although they are not yet listed, they have shown their commitment to the stock exchange and its potential for growth.
In addition to domestic investors, the list of investors also includes foreign strategic investors, 16 private commercial banks, 12 private insurance companies, and 17 other private domestic investors. This shows the confidence and interest in Ethiopia’s economy and its potential for growth.
The shareholding structure of the Ethiopian Securities Exchange is divided into 75% for private investors and 25% for public shareholding. This means that the stock exchange is a partnership between the private sector and the government. This will not only attract more investors but also ensure a balanced and sustainable growth of the stock market.
Prime Minister Abiy assured investors that all necessary preparations had been made for the relaunch of the stock exchange. He also highlighted the government’s efforts in building institutions and human capital to avoid any potential failures. This shows the government’s commitment to creating a conducive environment for investors and ensuring the success of the stock exchange.
Abiy also praised the country’s economy, stating that it is a fast-growing economy with immense potential and a dynamic trajectory towards prosperity. He highlighted some of Ethiopia’s major achievements, such as operating the biggest airline and largest telecom operator in Africa, as well as building the largest hydroelectric power plant on the continent. These achievements are a testament to the country’s potential for growth and development.
In July 2021, the Parliament established the Ethiopian Capital Market Authority, which is responsible for ensuring an orderly, fair, efficient, and transparent trading of securities. This is a crucial step towards creating a strong regulatory framework for the stock exchange, which will attract more foreign direct investment and contribute to the country’s economic growth.
Ethiopia’s economy heavily relies on agriculture, with coffee, oilseed, flowers, and gold being the main export items. However, the government has introduced financial reforms, including floating the Ethiopian currency, to diversify the economy and reduce its dependence on agriculture. While this move has been supported by international financial institutions, it has also led to an increase in inflation and prices of imported goods.
This week, the government announced an increase in fuel prices, which has caused concern among residents about the rising cost of living. However, the relaunch of the stock exchange is expected to have a positive impact on the economy and help mitigate the effects of inflation.
Ethiopian economist and executive director of Initiative Africa, Kibur Gena, believes that the stock exchange should align with the country’s broader development goals. He emphasized the need for a gradual and strategic approach to the establishment of the stock exchange, with a focus on building strong institutions and a regulatory framework to attract foreign direct investment.
The relaunch of the Ethiopian Securities Exchange comes at a time when the country is facing security challenges in the Amhara and Oromia regions. Kibur believes that in order to attract foreign investors, there needs to be peace and stability throughout the country. He is confident that the government will address these issues to achieve its objectives and attract more foreign investment.
In conclusion, the relaunch
