By Dawit Endeshaw
ADDIS ABABA (Reuters) – Ethiopia launched a securities exchange on Friday, in what officials touted as a milestone in Prime Minister Abiy Ahmed’s drive to open up the country’s tightly controlled economy to private investment.
Just one company, Wegagen Bank, was initially listed on the Ethiopian Security Exchange (ESX), although ESX chief executive Tilahun Kassahun said he expected 90 companies to eventually join over the next 10 years.
State-owned telecom Ethio Telecom, which is preparing for an initial public offering, is also widely expected to list shares on the exchange.
“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 said in a post on the X platform.
Ethiopia, Africa’s second most populous country with around 130 million people, had a securities exchange in the 1960s and 70s, but it was abolished by the socialist military government that overthrew the monarchy in 1974.
It has registered some of the continent’s fastest economic growth rates for years. Abiy’s moves to liberalise the economy since coming to power in 2018 have attracted interest from foreign companies, including Kenya’s Safaricom, which won the country’s first private telecoms licence in 2021.
However, progess has been slowed by armed conflict in several parts of the country, including a 2020-2022 civil war in the northern Tigray region that killed hundreds of thousands. Some investors have also raised questions about the government’s true commitment to liberalisation.
Mark Bohlund, a senior credit research analyst at Redd Intelligence, said he doubted there would be 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.
Still, Ethiopian investors called it a historic moment in the country’s economic evolution.
“For the first time, local investors can become true stakeholders in Ethiopia’s largest companies,” Henok Assefa, the founder of Precise Consult, an Ethiopian investment and economic development advisory, told Reuters.
Ethiopia defaulted on a Eurobond payment in late 2023 but secured an International Monetary Fund support programme last July after letting the birr currency float, easing a liquidity crunch.
(Reporting by Dawit Endeshaw; Additional reporting by Duncan Miriri; Editing by Aaron Ross and Elaine Hardcastle)
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