Ethiopia launches its stock exchange to attract investors

By taking the helm of Ethiopia in 2018, Prime Minister Abiy Ahmed showed a desire for ambitious reforms, in particular the modernization of a highly state-controlled economy, very regulated and not very open to foreign investment.

But multiple internal conflicts – including the deadly and destructive war in the northern region of Tigray (2020-2022) – have put a halt to reforms.

“This is a new beginning,” Mr. Abiy declared during the inauguration in Addis Ababa, urging “Ethiopians to take risks.”

“We will make the capital market a success,” he added before symbolically ringing the stock exchange bell.

The president of the Ethiopian Securities Exchange (ESX) Tilahun Kassahun, affirmed, without giving a timetable, that the ambition was to have 90 listed companies and four million investors.

The country’s last stock market was closed almost 50 years ago after the fall of Emperor Haile Selassie in 1974 and the coming to power of a Marxist-inspired regime, the Derg, which had nationalized the economy.

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The reopening of the Stock Exchange “should have happened a long time ago,” independent analyst Samson Berhane told AFP, adding that this will “help investors raise long-term funds and even regularize the bond market.” and the interbank market.

In recent months, authorities have adopted a series of economic reforms to attract investors. In December, Parliament adopted a partial liberalization of its banking system, allowing foreign players to establish themselves.

In October, the government organized the first sales of shares in the public telecommunications operator Ethio Telecom, up to 10%.

At the end of July, to obtain a loan from the International Monetary Fund (IMF), Ethiopia notably announced a major reform of the exchange system, which was then highly controlled, by allowing commercial banks to freely set the exchange rate. .

The second most populous country in Africa, with some 120 million inhabitants, Ethiopia recorded high rates of economic growth – often above 10% annually – between 2004 and 2019.

But the aftershocks of the Covid pandemic and the war in Ukraine have affected its economy. Growth stood at 5.9% on average between 2020 and 2023, while inflation exploded from 20.4% to 30.2% over the same period, according to the World Bank.