source: CNBC Africa
Mid-January 2025 marks a transformative milestone for Ethiopia’s financial sector, with the Ethiopian Securities Exchange (ESX) set to officially launch its operations.
Announced at a press conference led by CEO Tilahun Esmael Kassahun, the ESX unveiled its new state-of-the-art trading floor, underscoring its readiness to modernize Ethiopia’s financial landscape. This development follows the Ethiopian Capital Market Authority (ECMA) granting the ESX its operational license on 7 December.
The ESX holds dual licenses:
- To operate a securities exchange for issuers meeting listing criteria.
- To manage an Over-the-Counter (OTC) market, catering to smaller businesses and issuers that do not meet the formal listing requirements.
Empowering Ethiopia’s Capital Market
Hana Tehelku, ECMA’s Director General, emphasized the significance of this achievement in a press release shared on LinkedIn:
“This marks a transformative step toward establishing a vibrant capital market in Ethiopia. It provides businesses access to sustainable financing while offering investors new avenues to grow their wealth. Our commitment as regulators is to uphold transparency, integrity, and innovation, ensuring the market thrives and contributes to Ethiopia’s economic prosperity.”
The ESX operates as a public-private partnership under Article 31 of the Capital Market Proclamation (No.1248/2021) and is recognized as a Self-Regulatory Organization (SRO) under this framework.
Laying the Groundwork for Growth
According to an ESX press release cited by African Markets, the exchange aims to revolutionize Ethiopia’s financial sector. It will host diverse marketplaces, including equity, debt, and OTC platforms, catering to a broad spectrum of issuers ranging from large corporations to small businesses. Its fixed-income market will feature products like treasury bills, corporate bonds, and Shariah-compliant instruments such as Sukuks.
Strategic Build-Up and Modern Infrastructure
The ESX’s journey to launch has been marked by extensive preparation. Over two years, the exchange has:
- Established frameworks for corporate governance, risk management, and compliance.
- Raised $26.6 million (ETB 1.51 billion) from 48 investors across various industries, exceeding its $11.1 million target.
- Published a comprehensive rulebook and collaborated with ECMA to develop internationally aligned regulatory frameworks.
Modern IT systems from InfoTech Group have also been deployed, including an electronic trading platform (ETP) and a shared Broker Back Office system. These systems ensure real-time, secure, and efficient trading, with interbank money market trading already operational since 31 October.
Ethio-Telecom IPO: A Major Listing Milestone
One of ESX’s inaugural listings could be Ethio-Telecom, Ethiopia’s state-owned telecom giant. The company is undertaking a 30 billion ETB ($236 million) initial public offering (IPO), expected to be the second-largest IPO in Africa in 2024. The IPO is set to close on 3 January, with results anticipated by 31 January.
A New Era for Ethiopia’s Economy
The ESX launch represents a pivotal shift in Ethiopia’s financial infrastructure. With robust preparation, advanced technology, and strategic partnerships, the exchange is positioned to be a catalyst for economic transformation, unlocking opportunities for businesses and investors alike.