Addis Abeba — Ethiopia's financial landscape is currently on the cusp of a historic transformation as it gears up for the grand unveiling of its very first stock market, the culmination of over three years of strategic groundwork.of Meles Minale, a macroeconomic advisor at the National Bank of Ethiopia, to spearhead a team of 14 experts in laying the foundation for Ethiopia's first full-fledged capital market.
Authorities also highlighted strong investment intentions from companies based in Kenya, Nigeria, and South Africa.As of one month ago, the ESX had successfully secured over 95% of its targeted capitalization of one billion birr. This achievement paves the way for the exchange to officially commence operations.
Their caution is partly informed by the relatively modest impact observed from the establishment of capital markets in other African countries. The establishment of a capital market in Ethiopia is not an entirely novel endeavor. Public-share subscriptions by large corporations and financial companies have been
However, officials contend that the current initiative represents a significant departure from these past attempts. "These benefits have the potential to be realized," the director general stated, adding,"once they have grown, SMEs will also have the opportunity to be listed on the exchange themselves, allowing them to sell shares and issue corporate bonds."
However, Gemechu Daba, an adjunct lecturer at Addis Ababa University, argues that the process of going public through an initial public offering can be cost-prohibitive for SMEs operating in Ethiopia due to significant legal, accounting, and marketing fees.Subsequent to the issuance and purchase of securities in the primary market, secondary markets provide a platform for the resale of these securities.
Citing the findings of various studies, some academics challenge the government's claim that the new Ethiopian secondary market will be accessible to a wide range of companies, including SMEs.At the launch of the exchange, at least 15 companies with substantial capital backing are anticipated to list, with the possibility of expanding to at least 50 entities, primarily banks and insurance companies.
"This would be achieved by facilitating the direct capital acquisition of larger corporations within the market, thereby alleviating the strain on traditional lending channels," he stated.
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