Ethiopia has launched its first securities exchange in 50 years, marking a significant milestone in Prime Minister Abiy Ahmed‘s efforts to open up the country’s tightly controlled economy to private investment. The Ethiopian Securities Exchange (ESX) was officially inaugurated on Friday, a move that officials believe will transform the economic landscape.
Initially, only one company, Wegagen Bank, was listed on the ESX. However, ESX Chief Executive Tilahun Kassahun expressed optimism that up to 90 companies would join the exchange over the next decade. Among the anticipated listings is the state-owned telecom giant, Ethio Telecom, which is preparing for an initial public offering (IPO).
“In a historic milestone for our economic and financial landscape, we have officially rung the bell to launch the Ethiopian Securities Exchange,” Prime Minister Abiy Ahmed announced in a post on the X platform.
Ethiopia, Africa’s second most populous country with approximately 130 million people, previously had a securities exchange in the 1960s and 70s. However, it was abolished by the socialist military government that overthrew the monarchy in 1974. Despite this, Ethiopia has recorded some of the continent’s fastest economic growth rates in recent years.
Since coming to power in 2018, Prime Minister Abiy Ahmed has implemented several economic liberalization measures that have attracted interest from foreign companies. Notably, Kenya’s Safaricom won the country’s first private telecom license in 2021. However, progress has been hampered by armed conflicts in various parts of the country, including a devastating civil war in the northern Tigray region from 2020 to 2022, which resulted in hundreds of thousands of deaths. Additionally, some investors have expressed concerns about the government’s genuine commitment to liberalization.
Mark Bohlund, a senior credit research analyst at Redd Intelligence, expressed skepticism about significant foreign interest in the securities exchange. “I think Ethio Telecom is the only company which would come close to the financial reporting and liquidity requirements to attract foreign investors,” he said.
Despite these challenges, Ethiopian investors have hailed the launch of the ESX as a historic moment in the country’s economic evolution. The establishment of the securities exchange is seen as a crucial step towards fostering a more open and dynamic economic environment, potentially unlocking new opportunities for growth and development.