ADDIS ABABA – Abiy Ahmed’s administration has taken additional step to set up the Ethiopian Securities Exchange (ESX) with a cooperation agreement with FSD Africa, UK’s capital market facilitator.
The proposed exchange will serve as a key market institution to provide Ethiopian entrepreneurs and businesses with access to long term finance, authorities say.
Ethiopian Investment Holdings, manager and owner of state-owned companies, and the Ministry of Finance signed the agreement to set up the Exchange with FSD Africa (Financial Sector Deepening – Africa) on Wednesday.
“Today’s cooperation agreement… is a first concrete step towards realizing our vision,” said Finance Minister Ahmed Shide.
The singing comes a year after the government ratified the Proclamation for the Establishment of Capital Market, and the central bank, subsequent, approval of the primary market directive.
Ethiopia is among the biggest five economies in sub-Saharan Africa, and yet, it does not have a stock exchange.
The latest partnership would help the nation to set up the ESX, which will ne the 30th exchange in Africa.
“The establishment of the exchange through public-private partnership will usher in a new era for the Ethiopian financial industry and the economy as a whole,” Ahmed added.
FSD Africa, a member of FSD Network, will provide support to ensure a functioning exchange. The network has recently been providing training to local experts on capital markets.
“Our assistance in establishing the ESX will leverage our vast expertise and experience in developing capital markets infrastructure across Africa,” said Mark Napier, CEO of FSD Africa.
“This support signals our long-term commitment to a thriving capital market that is deep, liquid and efficient.”
In addition to its role in the establishment of the Exchange, authorities say Ethiopian Investment Holdings or EIH would serve as the wind underneath ESX’s wings.
It plans to play this role by floating minority shares of selected companies under its management, according to EIH, owner and manager of government-owned companies.
“ESX will democratize corporate ownership of the nation’s largest and most influential companies, empowering Ethiopians with a direct stake in their country’s economic infrastructure,” the EIH said.