The launch of a capital market in Ethiopia is expected to stimulate innovation and investment, according to the Ethiopian Capital Markets Authority.
The Authority announced that the establishment of a functioning capital market in Ethiopia will encourage innovation and investment, and create a centralized capital market system. Appearing on ETV's "Addis ken" (New Day) program, officials from the Capital Markets and Securities Exchange discussed how this system will allow company owners to raise capital by selling shares to individuals, and also facilitate the sale of debt securities.
Hana Tehlku, Director General of the Ethiopian Capital Markets Authority, stated that the launch of the capital market in Ethiopia will create a comprehensive legal framework allowing investors to trade independently based on their needs and requirements. She emphasized that the capital market Ethiopia intends to build cannot be imagined without technology, and that utilizing technology will help reduce transaction costs.
Sewale Abate, Assistant Professor of Finance and Investment at Addis Ababa University, noted that both government and private sector institutions and projects needing capital can benefit from this market. He highlighted the absence of institutions previously catering to investor needs and emphasized that the Ethiopian Capital Markets Authority will regulate the market and issue licenses.
Entities involved in selling stocks and bonds will operate only after receiving the necessary qualifications and licenses from the Ethiopian Capital Markets Authority. This process, it was argued, will significantly reduce the fraud previously prevalent.
Tilahun Kasahun (Dr.), Director General of the Ethiopian Securities Exchange, pointed out that the groundwork for the capital market system had begun earlier, with infrastructure development underway since the enactment of the relevant law. He highlighted the global significance of capital markets, citing the $118 trillion market capitalization, with major centers in New York, London, Shanghai, Tokyo, Johannesburg, and Nairobi.
Efforts to establish a capital market—widely recognized in developed countries and expected to significantly transform Ethiopia's financial system have been ongoing. The Capital Markets Proclamation of 2013 has now been put into effect.
Officials indicated that the establishment of a centralized Ethiopian securities market will allow for easier investment of savings. It's believed that this stock market will serve as a crucial financial source for both the government and the private sector during times of banking crises, connecting investors with their desired investment options.