Wegagen Bank among first to list
Ethiopia’s long-anticipated stock exchange went live on Friday, marking a turning point for an economy struggling with low access to finance. Banking gurus, economists, and investors who have advocated for a stock market in past decades have hailed the inauguration of the Ethiopian Securities Exchange (ESX) as historic.
Despite being home to one of the largest economies in Sub-Saharan Africa and the second-largest population on the continent, Ethiopia has not had a secondary market since the socialist Derg regime shuttered a rudimentary securities exchange that opened in the final decades of the Imperial era.
Plans to revive the secondary market began to gather pace following the political upheaval of 2018, which marked the start of an economic liberalization process that was off the table under EPRDF administration.
Major preparational work like establishing the Ethiopian Capital Market Authority and ratification of institutional and legal frameworks were finalized over the last two-and-a-half years. Although the stock market’s inauguration has been delayed several times, the ESX floor finally opened this week.
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Officials want to see ESX host at least 90 initial public offerings (IPOs) in the coming years. Shares, equity, and debt securities will be traded on the platform. Banks, state-owned enterprises (SOEs) and other eligible firms are eligible to list.
Wegagen Bank has become among the first to offer equity on ESX, sources told The Reporter.
Ethio telecom’s 10 percent stake offering is slated to go live on ESX, while at least four other SOEs under the Ethiopian Investment Holdings (EIH) are also expected to list.
The inauguration ceremony on Friday was organized by the Office of the Prime Minister and saw the attendance of Abiy Ahmed and other senior officials. The ceremony was closed to mainstream media, and attendees were prohibited from taking photos or recording videos.
“In a historic milestone for our economic and financial landscape, we have officially rung the bell to launch the Ethiopian Securities Exchange, the first stock exchange for our country. Invest in Ethiopia, a fast-growing economy with immense potential and a dynamic trajectory toward prosperity,” reads a social media post from the PM.
During the ceremony, he said that “investors should not worry. The government has many giant state enterprises. In the past couple of years, we have undertaken serious preparations in order to launch a successful stock exchange and avoid any chance of failures.”
Tilahun Kassahun, CEO of the Exchange, stated the market would not have been realized without the economic reforms of the past few years, as well as the launch of the digital National ID.
The banking industry is likely to be the first to brave the new market. An estimated 400,000 shareholders hold equity in the country’s commercial banks, and they will now be able to sell and buy shares on ESX at any time.
Companies also will be able to issue debt securities, which so far have been limited to treasury bonds issued by the National Bank of Ethiopia (NBE).
Regulators have been busy digitizing existing equity and stock records, which should be accessible in real time via the ESX platform.
The stock exchange is Sharia-compliant, with products like sukuk. It will be the third-largest sharia compliant stock exchange in Africa, according to Tilahun.
“We will reach the milestone that stock exchanges like those of Nigeria and Egypt achieved in a short time,” added Tilahun.