Ethiopia bets on first exchange in 50 years to pull foreign capital

By Seth ONYANGO

Ethiopia has debuted its first securities exchange in 50 years, the latest reset in its market liberalisation drive to slash restrictions and attract foreign investments.

It’s a boon for investors eyeing the populous Horn of Africa state, which has been cautiously opening its economy to global capital.

The Ethiopian Securities Exchange (ESX) opened with just one listing, Wegagen Bank, but officials are optimistic about its growth.

Speaking at the launch on Friday, ESX CEO Tilahun Kassahun projected that as many as 90 companies could join the exchange over the next decade, including the state-owned telecom giant Ethio Telecom, preparing for a much-anticipated IPO.

The exchange, which replaces the securities platform shuttered during the socialist era of the 1970s, arrives as Ethiopia aims to draw foreign capital to fuel its economy.

It is also part of Prime Minister Abiy Ahmed’s broader market reform agenda, which included opening the telecom sector to international players like Kenya’s Safaricom.

“In a historic milestone for our economic and financial landscape, we have officially rung the bell to launch the Ethiopian Securities Exchange,” the prime minister said in a post on X when he launched the bourse.

“Invest in Ethiopia — a fast-growing economy with immense potential and a dynamic trajectory toward prosperity.”

For investors, the launch signals a significant shift in Ethiopia’s economic strategy. While the country has posted some of Africa’s fastest growth rates, until recently its markets have remained relatively closed.

But Mark Bohlund, senior credit analyst at Redd Intelligence, cautioned in a post on X that few local firms meet international standards for financial transparency.

Ethio Telecom, set to be among the ESX’s flagship listings, could act as a bellwether for foreign investor confidence.

For decades, Ethiopian businesses have faced steep barriers to growth due to limited financing options.

The ESX changes the game, linking domestic and international investors with local enterprises.

Analysts believe this could be a turning point for sectors like manufacturing and agribusiness, which are poised to expand but remain undercapitalised.

The momentum from the ESX is sparking speculation about further reforms.

Ethiopian Airlines, the continent’s most profitable carrier, is widely viewed as the next candidate for partial privatisation.

Injecting private capital into the airline could solidify its global dominance while signalling Ethiopia’s commitment to liberalisation.

Prime Minister Ahmed also plans new sweeping reforms that will allow foreigners to buy property.

Last October, Addis Ababa introduced a market-based exchange rate system.

“This measure will correct decades old distortions and remove the major binding constraint in the Ethiopian Economy,” the country’s Finance Minister Eyob Tekalign said at the time on X.

With a population of 130 million and a growing middle class, Ethiopia offers significant market potential but faces hurdles, including political instability and a patchy track record on reform delivery.

The exchange’s debut also underscores Ethiopia’s ambition to move beyond donor-driven development models.

By offering a structured platform for raising capital, the ESX could unlock private sector growth and improve access to funding for businesses across sectors.

For now, the spotlight is on whether the exchange can deliver at a time when most bourses on the continent are struggling to attract listings.

With a fledgling regulatory framework and questions about liquidity, the ESX has a long road ahead to match the region’s more mature markets.

Still, its launch is seen as crucial for Ethiopia’s journey to integrate with the global financial system.