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In line with ongoing efforts to become an open economy, Ethiopia’s securities exchange (ESX) is expected to begin operations in October, according to its chief executive. Private investors can purchase up to 75% of the shares, while the state-controlled sovereign wealth fund will retain 25%.
The government of Ethiopia is considering selling a 10% stake in the state-owned telecoms company through the securities exchange. Despite being East Africa’s largest economy, with a GDP of around USD 205 billion according to the IMF, Ethiopia has lacked a stock exchange. Since taking office in 2018, Ethiopian Prime Minister Abiy Ahmed has launched an initiative to open up the country, which has historically been under tight state control, to greater private investment.
The government actively seeks private investors to purchase up to 75% of the ESX’s shares. Ethiopian Investment Holdings, the state-controlled sovereign wealth fund, along with its subsidiaries, will retain the remaining 25% shareholding.
In April, the Nigerian Exchange (NGX) Group plc announced a significant investment in the Ethiopian Securities Exchange (ESX). The bourse’s CEO, Tilahun Esmael Kassahun, stated that all necessary human resource and technological preparations will be completed by October, as reported by Fana Broadcasting. The modern, electronic trading platform will cater to equity and fixed-income markets, listing government treasury bills, bonds, and corporate debt instruments. It will also feature an alternative capital market designed to support smaller businesses.
While Ethiopia’s economy has been facing the legacy of being a command economy for decades, Abiy’s push since 2018 towards more private sector involvement has been notable for being more ambitious than previous attempts at liberalization. In late July, Ethiopia made a bold move to float its currency as part of its efforts to secure support from the International Monetary Fund (IMF). This move was necessary to pave the way for a long-overdue debt restructuring process.
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In February, Prime Minister Abiy Ahmed revealed that the government is considering selling a 10% stake in the state-owned telecoms company, Ethio Telecom, through the upcoming securities exchange. Ethio Telecom maintained a monopoly in the market until 2022 when a consortium led by Kenya’s Safaricom won the country’s first private telecoms license and began commercial operations.
