Ethiopia has officially launched its first stock exchange after the Ethiopian Securities Exchanges (ESX) received official operational license from the Ethiopian Capital Market Authority (ECMA).
“Having obtained two critical licenses from ECMA, to operate a Securities Exchange and an Over-the-Counter (OTC) Market, ESX is now set to revolutionize the country’s financial sector, laying the groundwork for robust capital market and economic growth,” said ESX.
ESX formally launched on January 10 2024 with one listed firm, privately-owned Wegagen Bank.
The ESX licensing enables it to launch a wide range of markets and provide products and services tailored to diverse issuers and investors across its key platforms, including equity, debt, and OTC markets. Its equity market will accommodate issuers of all sizes, from large corporations to small and medium enterprises.
At the same time, the fixed-income market will serve as a platform for trading various debt instruments, such as government treasury bills and bonds, corporate bonds, and Shariah-compliant securities like Sukuks.
Over the past two years, ESX has done a successful capital raise and published a comprehensive rulebook to regulate markets, among other activities.
ESX has also launched a state-of-the-art electronic trading platform, along with a shared Broker Back Office and order management systems, ensuring secure, efficient, and accessible trading for all participants. This platform supports real-time transactions and adheres to international standards, said the exchange.
Speaking following the launch, Tilahun Kassahun, the CEO of the Ethiopian Securities Exchange (ESX), said:
“For the past 30 years, Ethiopia has developed a bit of a base in terms of issuer and investor experience.
Almost all commercial banks and insurance companies are established as public limited companies, which means they have actually raised public capital and have been trading in an unregulated informal OTC markets. There are about 400,000 shareholders within this financial sector alone and transactions in billions in Birr in these secondary markets.
At ESX, we anticipate several of these companies to list . . . We anticipate almost all of these institutions will trade as listed companies or in the OTC market through the exchange platform.”
According to the ESX CEO, the bourse aims to list atleast 10 firms each year, for the next 5 years.
The establishment and launch of the Ethiopian Securities Exchange comes as part of a five-year reform agenda aimed at modernizing Ethiopia’s economic landscape.
Already, telecommunications giant, Ethio Telecom, which has already floated 10% of government stake in the market, announced it will be listing on the exchange once it is active.
🇪🇹 REGULATION | Ethio Telecom to Sell 10% to Public via TeleBirr Super App Ahead of the Ethiopian Stock Exchange Launch
The share sale will take place from October 16, 2024 to January 03 2025, the company said. https://t.co/EvLS5CtJAt @ethiotelecom pic.twitter.com/stSwls6olT
— BitKE (@BitcoinKE) October 18, 2024
Hana Tehelku, the Director General of ECMA, hailed the event as a transformative moment.
“The licensing of our first securities exchange is a vital step towards creating a vibrant capital market in Ethiopia. It will not only provide businesses with the tools to access sustainable financing but also open new avenues for investors to grow their wealth.
As regulators, we are committed to ensuring that the market operates with integrity, transparency, and innovation,” Tehelku stated during the announcement.
The government is expected to list government entities that will be listing on ESX.
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