Ethiopia Securities Exchange starts trading
Ethiopia’s Securities Exchange (ESX) has officially began trading increasing the number of stock exchanges to five in Eastern Africa. CNBC Africa’s Aby Agina spoke to Mered Fikireyohannes, CEO, Pragma Investment Advisory for more on upcoming listings and the potential the capital markets could portend for African economies.
Mon, 13 Jan 2025 14:46:38 GMT
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AI Generated Summary
- The inauguration of ESX signifies a significant stride in Ethiopia's economic reform agenda, underscoring the government's commitment to market-driven growth and private sector development.
- ESX's initial listings, including Wagagan Bank and upcoming offerings like Ethiopian Telecom, showcase the exchange's potential to attract diverse companies from sectors such as banking, insurance, and real estate.
- Despite initial challenges, ESX is positioned to leverage international interest and domestic market opportunities to establish itself as a prominent player in Africa's capital market arena.
Ethiopia's Securities Exchange (ESX) has officially begun trading, marking a significant milestone for the country's capital markets. The launch ceremony, attended by Prime Minister Abiy Ahmed, symbolizes a new era of economic reform and private sector development in Ethiopia. Mered Fikireyohannes, CEO of Pragma Investment Advisory, discussed the implications of this historic moment in an interview with CNBC Africa.
The inauguration of ESX represents the culmination of years of efforts by regulators and exchange officials to establish a robust capital market in Ethiopia. The Prime Minister emphasized the importance of the exchange as a key component of the government's economic reform agenda, which includes initiatives such as digitalization and creating a conducive environment for private sector growth. By introducing a capital market, Ethiopia aims to enhance wealth creation opportunities for private businesses and shift towards a more market-driven economy.
One of the initial listings on ESX includes Wagagan Bank, with more companies like Ethiopian Telecom set to follow suit after completing their IPO processes. The exchange is also poised to welcome banks, financial institutions, insurance companies, and real estate firms as part of its diverse listing offering. ESX's introduction of an interbank money market has facilitated significant trade volumes, demonstrating its potential to address liquidity challenges within the financial system.
Despite being a late entrant in the African capital market landscape, Ethiopia's securities exchange has leveraged insights from counterparts in countries like Nigeria and Kenya to develop a comprehensive trading platform. In addition to traditional equities trading, ESX will feature an over-the-counter market and support the issuance of various financial instruments. Companies meeting specific criteria will be required to register their securities and participate in the exchange's trading activities, paving the way for increased market activity.
Looking ahead, Ethiopia's growing economy, which has consistently recorded impressive annual growth rates above 8%, presents lucrative opportunities for investors. Foreign interest is expected to be particularly high in companies like Ethiopian Telecom, which possess the scale and appeal to attract international capital. Beyond state-owned enterprises, other local companies, including Brahana Salam Printing Press and Ethiopian Insurance Corporation, are primed for listing on ESX, alongside foreign firms eyeing the market for expansion.
As Ethiopia embarks on its capital market journey, challenges such as financial requirements for listings and investor attraction will need to be addressed. However, with a clear roadmap and a commitment to fostering a dynamic trading environment, ESX is poised to emerge as a key player in Africa's financial landscape. With a promising outlook for the future, ESX stands as a market to watch in the coming years, offering a gateway for domestic and international investors to participate in Ethiopia's economic transformation.