Ethiopia plans to reopen its stock exchange after a 50-year hiatus, hoping to draw in both foreign and domestic investors.
The Ethiopian Securities Exchange (ESX), set to launch this Friday, will open with the initial public offering (IPO) of Ethio Telecom, the state-owned telecommunications giant.
Ethiopia Investment Holdings, which oversees 40 state-owned enterprises, plans to raise up to 30 billion birr ($234 million) through the sale of a 10% stake in Ethio Telecom. This IPO marks the first step in Ethiopia’s broader strategy to list additional companies, with plans to introduce up to 50 firms to the exchange within the next five years.
The ESX is a critical component of Prime Minister Abiy Ahmed’s economic reforms, aimed at modernizing Ethiopia’s financial infrastructure and boosting private sector participation. Previously, Ethiopia’s financial system relied on over-the-counter transactions, limiting transparency and growth. By establishing the ESX, Ethiopia seeks to create a platform where companies can raise capital and investors can trade shares more effectively.
Ethiopia’s move comes at a time of cautious optimism. Despite past challenges, including a civil war and inflation that peaked above 30% in 2023, the economy is recovering. GDP is projected to grow by 8% in 2024, reflecting gradual stabilization.
Experts believe the ESX could attract international and domestic investors, particularly in high-growth sectors like telecommunications, agriculture, and manufacturing.
The privatization of Ethio Telecom is a centerpiece of these reforms. Once a monopoly, the telecom sector was opened to competition in 2022, attracting significant foreign interest. Future plans include divesting an additional 45% of Ethio Telecom and issuing a second private telecom license, potentially transforming the sector.
However, challenges remain. Political instability, fluctuating currency values, and inflation pose risks to investor confidence. Experts emphasize the need for effective governance and macroeconomic stability to fully unlock Ethiopia’s investment potential.
The ESX’s launch marks a turning point in Ethiopia’s economic trajectory, offering a promising gateway for investors eyeing one of Africa’s most populous nations with untapped potential.
