Ethiopia relaunched its stock exchange, the Ethiopian Securities Exchange, on Friday after a 50-year absence.
The Ethiopian Securities Exchange ceased operations in 1974 following a takeover by the communist military government.
Prime Minister Abiy Ahmed described the relaunch as a “historic milestone” for Ethiopia’s economic and financial landscape.
“We have officially rang the bell to launch the Ethiopian Securities Exchange – our country’s first stock exchange. Invest in Ethiopia – a fast-growing economy with immense potential and a dynamic trajectory towards prosperity,” he posted on X.
The launch of the stock exchange means the government opened up the domestic stock market, starting with state-owned Ethio Telecom, which has yet to launch an initial public offering of shares despite announcing the move in October.
Ethiopian authorities announced Friday that Wagen Bank, a private bank, was the first company to be listed on the exchange.
Ethiopian Insurance Corporation, Ethiopian Shipping and Logistics Services Enterprise, and Berhanena Salem Printing Exchange joined Ethiopia Telecom as founding members, although they are not yet listed.
According to a newsletter distributed during the event, the list of investors included foreign strategic investors as well as 16 domestic private commercial banks, 12 private insurance companies and 17 other private domestic investors.
Based on the shareholding structure of Ethiopia Securities Exchange, 75% of it is allocated to private investors and 25% is earmarked for public shareholding. This means that the share company is a private-government partnership.
Abiy assured investors that all necessary preparations have been made. Speaking in Amharic, Abiy said the government had conducted extensive research, passed laws and built more institutions and human capital over the past two and a half years to “avoid failure.”
He also praised the country’s economy.
“Ethiopian economy means an economy that operates the largest airline in Africa. Ethiopian economy means an economy that operates the largest telecommunications operator in Africa. Ethiopian economy means an economy that operates the largest airline in Africa. Built the largest hydroelectric power plant,” he said, referring to Africa’s largest airline. and the Grand Renaissance Dam, considered the largest project of its kind on the continent.
In July 2021, the Parliament established the Ethiopian Capital Markets Authority and tasked it with ensuring the existence of an environment in which securities can be issued and traded in an “orderly, fair, efficient and transparent manner”.
Ethiopia’s economy depends largely on agriculture, with coffee, oilseeds, flowers and gold being the main export commodities. Last year, the government initiated financial reforms that included the issuance of the Ethiopian currency, a move supported by international financial institutions.
But the market-based monetary policy increased inflation and the prices of imported food and fuel skyrocketed.
This week the government announced an increase in the price of benzene from 73 cents to 82 cents per liter. Similarly, the price of white diesel increased from 72 cents to 78 cents per litre, with similar increases imposed on other fuel types, with residents saying the move would worsen cost of living and transportation challenges.
Kibur Gena, an Ethiopian economist and executive director of Initiative Africa, said the Ethiopian Stock Exchange should align with the country’s broader development goals.
“The government of Ethiopia should approach the establishment of a stock exchange gradually and strategically,” he told VOA.
He argued that the government should also create strong institutions and a regulatory framework “so that it can attract foreign direct investment.”
The relaunch comes at a time when the country is facing security challenges in the Amhara and Oromia regions.
Kibur said there was a need for peace in the entire country to attract foreign investors.
“I think this government will realize that if it wants to achieve its objectives, it must address peace issues,” he said.