The creation of the Ethiopian Securities Exchange (ESX) seems to be finally happening after initial finalization announcements in 2020. The Ethiopian Ministry of Finance, the Ethiopian Investment Holdings, and FSD Africa on Wednesday, May 18, signed a cooperation agreement to establish ESX.
Some time ago, when the military government in Ethiopia was abolished, the Addis Ababa Share Dealing Group went along with it, and no capital markets existed in Ethiopia. In the late 1950s, there were attempts to reestablish a capital market, but the efforts didn’t last.
When Prime Minister Abiy Ahmed came to power in 2018, the country was opening up more, seeking to pursue economic reforms and establish a stock exchange governing body.
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One of the biggest five economies in sub-Saharan Africa
Ethiopia is among the biggest five economies in sub-Saharan Africa and is the second-largest in terms of population; yet, it does not have a stock exchange. Now, it seems that Ethiopia will finally have a functioning exchange, which will make it the 30th exchange on the continent.
Through the signed agreement, FSD Africa will fund almost all aspects to ensure a functioning exchange. H. E Ato Ahmed Shide, Minister in the Ministry of Finance, said:
“The establishment of a securities exchange, the first in our nation’s history, through such a public-private partnership will usher a new era for the Ethiopian financial industry and the economy as a whole. Today’s cooperation agreement between the Ministry of Finance, EIH, and FSD Africa is a first concrete step towards realizing our vision.”
To top things off, through the African Linkage Project (AELP), a value chain for brokerage firms was created to try and facilitate investment flows through African stock exchanges.
Throughout this process, the African Securities Exchanges Association (ASEA) will link 7 African capital markets together, which will help companies bring in new capital and create value for shareholders.