Even though the National Bank of Ethiopian (NBE), is working under a taskforce to make a stock market a reality, the bank, at a meeting last week, referred to a 20- year-old study conducted by then Addis Ababa Chamber of Commerce saying that it would help the taskforce do its work.
During the Ethiopian Chamber of Commerce and Sectoral Association ‘Ethio-Chamber Business Diner’ held on Thursday March 15 at Hilton Hotel the stock market was brought up.
The discussion entitled: ‘Stock Market in Ethiopia: Challenges and Prospects’ attracted people working in the financial sector, government, business and community leaders.
Zafu Eyesuswork Zafu, who previously led the city and national business chamber, took the opportunity to explain the benefits of opening a stock market. Zafu said opening a stock market will mean multiple advantages to the economy.
“The Stock market is source of capital and investment, improving saving culture, inclusive for the whole society, enabling competition on money markets between banks and shares, expanding share companies, providing real and adequate finance for new businesses and expansion and a good way to smash corruption,” Zafu explained.
He reminded attendees that the former Addis Ababa Chamber of Commerce undertook two volumes of in-depth studies on forming a stock market. Those reports were officially transferred to the government.
Even though the association undertook a study and submitted it to the government; the market, which was not a new concept in the country because there was a share dealing group during the emperor era. However a stock market has not been a potential reality until now.
Zafu said the private sector was working hard and conducted several studies to realize the market, but the government didn’t really support the idea.
He told Capital: “the government officials at the time, orally told us that a stock market was not the government’s priority.”
At the public private conference held during the time of late Prime Minster Meles Zenawi, the PM stated that the stock market was a casino.
“The developmental state paradigm does not make this a priority. If we interpret this it may indicate that investable resources should not be run in the direction that the private sector wants but instead be invested in the area the state wants,” Zafu speculated.
Recently the government announced that by 2020 the country will have a stock market. Some experts of suspicious but Zafu is optimistic.
Eyob Tekalegn (PhD), State Minister of Finance, told the audience that the government has a strong motivation to realize the initiative within the time frame.
Currently experts from the International Monetary Fund and the World Bank are here to conduct a study about forming a stock market in Ethiopia, which is one of the few countries in the world that don’t have a stock market.
Abate Miteku, who came from NBE, said that a task force has been formed at the central bank and the foreign experts from international organizations are working on it. But he said that they don’t have knowledge about the Chamber study that he said could help as an input for the current study.
“We did not get the stated two volumes,” he said. Zafu told Capital that it is surprising because the document was given to government officials, who were at the office during the time; the document should be available now. “I told them to copy the document from my own copy,” he added.
Zafu stated that even though the documents are 20 years old the basic areas would not be outdated. “The basic principles were used in the past and would be continued in the future so the study that we conducted would help,” he said.
Eyob said that if the documents are available it would shorten the period of the current study so it is crucial to see the documents.
Tesfaye Hailemichael, Managing Director of Cornerstone Advisory Services Plc, showed the participants what the stock market is and addressed regulatory and operations issues.