Ethiopia race to develop capital markets

Ethiopia's journey towards developing its capital markets has reached a significant milestone with the establishment of the Ethiopian Capital Markets Authority. The Authority, operational since its conclusion last year, is spearheading efforts to regulate and develop the securities market in Ethiopia. In a recent interview with CNBC Africa, Brook Taye, the Director General of the Capital Markets Authority, shed light on the progress and future plans for the country's capital markets. Over the past three months, the focus has been on creating a conducive environment for the launch of the market. Drafting directives for licensing capital market service providers, including brokers, dealers, and investment banks, has been a key priority. Additionally, the Authority is working on listing requirements for companies interested in being listed on the Ethiopian Securities Exchange. Taye highlighted the Authority's significant mandate, which includes regulating the securities market, developing the market, providing investor education, and protecting investors. With a commitment to ensuring market transparency and integrity, the Authority aims to build a robust capital market ecosystem in Ethiopia. One of the crucial developments in the journey towards establishing the securities exchange is the issuance of licenses to capital market service providers. The Authority has already issued a draft directive for public consultation, inviting feedback from market participants. Taye expressed confidence in the upcoming issuance of licenses, welcoming both local and foreign investors to participate in Ethiopia's capital market. The interest from capital market service providers has been substantial, with inquiries pouring in from regional hubs and investors in the U.S. Ethiopian diaspora members with financial sector expertise are particularly interested in contributing to the local market's growth and development. Looking ahead, the goal of having the Ethiopian Securities Exchange operational by the end of the year remains a key objective. The Authority is on track with its timeline and is actively working on the necessary infrastructure and training to ensure a successful launch. As the anticipation for the exchange builds, the appetite for listing on the exchange is also growing. State-owned enterprises, Ethiopian family-owned businesses, and foreign companies operating in Ethiopia have expressed interest in listing on the exchange. The prospect of a liquid exchange, coupled with a sizable retail investor base, positions Ethiopia to emerge as a significant player in the African capital markets landscape. With a clear vision, regulatory framework, and market interest, Ethiopia is poised to unlock its capital market potential and pave the way for economic growth and resource mobilization within the country and beyond.