Ethiopia is making headway towards the full fledged establishment of its first Ethiopian Stock Exchange. In October 2023, Ethiopia formally founded Ethiopian Security Exchange (ESX). Since then several milestones have been crossed to establish a fully operational stock exchange. On Thursday, ESX’s founding CEO Tilahun Esmael Kassahun, announced that the company had surpassed capital raising by 240%.
The formation of ESX as a share company was followed by the implementation of the Capital Market Proclamation, which was ratified in July 2021, and the formation of the Ethiopian Capital Market Authority (ECMA), the regulator overseeing the activities of ESX itself and other market players for the protection of investors.
The bourse, in October last year, signed the establishment document among its first five shareholders, altogether owning a 25% stake. Ethiopian Investment Holdings (EIH) & four of its state-owned subsidiaries, Ethio Telecom, Ethiopian Shipping and Logistics Service Enterprise (ESLSE), Ethiopian Insurance Corporation (EIC), and Berhanena Selam Printing Enterprise, are the five corporations which pledged to contribute 25% of the over 900 million capital which ESX will have.
Since last year, the Ethiopian Security Exchange has been mobilizing the rest 75 percent capital from private investors abroad and locally. SX aimed to raise US$11.07 million, but it announced on Thursday that it had obtained US$ 26.6 million, which is being seen as a major step towards the inauguration of the Ethiopian Stock Exchange later this year.
In February 2024, Ethiopian Prime Minister Abiy told a board meeting of Ethiopian Investment Holdings that board members would “decide how to proceed regarding the second issue where we said we will sell 10% of Ethio Telecom’s shares to the public via the capital market”. A telecoms industry insider claims that the Ethiopian government intends to retain 45% of Ethio Telecom, sell 45% to investors and list 10% on the stock exchange. Listing of the 10% stock on ESX is aimed at attracting foreign investors.
The ESX has been conducting roadshows in Addis Ababa, Nairobi, and London since last year. Among the 48 foreign investors who subscribed to its capital raise include FSD Africa, The Nigerian Exchange Group (NGX) and Trade and Development Bank. 16 domestic banks, and 12 insurance companies also subscribed to capital raise. Reportedly, the public sector will own a quarter of the ESX’s shareholding while private shareholders will take up the remaining 75%.
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