Ethiopia prepares to launch its own stock market exchange within two years time.
On Wednesday May 18, 2022 Ethiopian Investment Holdings /EIH/, Ministry of Finance and Financial Sector Deepening Africa /FSD Africa/ signed an agreement to establish the Ethiopian Security Exchange /ESX/, stock exchange in Ethiopia.
Through the corporation FSD Africa will fund technical support legal advice, and the costs associated with getting the exchange operational.
As Mark Napier, CEO of FSD Africa informs Capital, it will take 18 months to two years to launch the stock exchange. “We are now in the process and preparations for the launching, and the government wants an intermediary but there are things and steps we need to go through in order to launch the exchange,” explained Mark highlighting that the process will take about two years for the exchange to come to fruition.
The exchange is designed to provide a fundraising platform for small and medium-size enterprises. Furthermore, the exchange will also offer a platform for the privatization of Ethiopia’s state-owned enterprises.
It is indicated that ESX will serve as a key market institution that will provide Ethiopian entrepreneurs and businesses with access to long term finance.
As the owner and manager of state-owned companies, EIH is said to serve as the wind underneath ESX’s wings by floating minority shares of selected companies under its management.
At least fifty companies, including banks and insurance companies, are expected to list at the launch of the exchange.
“This will bring about opportunity for young entrepreneurs skilled professionals and most importantly to drive our citizens in developing a robust business with access to capital and source of funds and national digital payments strategy,” said Ahmed Shide, Minister of Finance.
Following the agreement signed between the two government bodies and FSD Africa on Thursday May 19, 2022, FSD Africa has launched its representative FSD Ethiopia.
FSD Ethiopia is now launched as a development agency that aims to support the development of accessible, inclusive, and sustainable financial markets for economic growth and development. FSD Ethiopia takes a market systems approach to promoting systemic change in Ethiopia’s financial sector. Funded by FCDO and the Bill & Melinda Gates Foundation, FSD Ethiopia is a market facilitator, providing technical assistance, grants, networks, research, and insights to market actors in both public and private sector domains.
The organization’s role is to identify the underlying causes of financial system failures and provide technical and financial resources to market actors to address these constraints to help build a functional and effective sector that generates economic gains for a wide cross-section of Ethiopian individuals and businesses. The body’s vision is to contribute to a thriving financial system that delivers real value to the economy and the people of Ethiopia.
Financial Sector Deepening Africa (FSD Africa) was created in 2012 and is a 35 million pound financial sector development program based in Nairobi and funded by the UK Government’s Department for International Development.
FSD Africa is a market facilitator that applies a combination of resources, expertise, and research to address financial market failures. It has the mandate to work across sub-Saharan Africa on issues that relate to both ‘financial inclusion’ and ‘finance for growth.’
FSD Africa is also a regional platform. It fosters collaboration, best practice transfer, economies of scale, and coherence between development agencies, donors, financial institutions,
Ethiopia began the process in 2020 by introducing a proclamation through the parliament where the national bank was a regulatory body. Apart from the Addis Ababa Share Dealing Group which was operating during the Derg regime, Ethiopia has not managed to establish a capital market till now.