The Ethiopian Securities Exchange (ESX) is the primary securities exchange in Ethiopia. Its establishment is part of a broader initiative by the Ethiopian government to enhance the country's financial infrastructure and provide a platform for businesses and investors to engage in securities trading.
Early Initiatives in Share Trading
The concept of a securities exchange in Ethiopia is not entirely new. In 1960, Ethiopia initiated its journey into share trading by establishing an institutional framework and inaugurating a share exchange department within the State Bank of Ethiopia. As the share market grew, the Share Trading Group was formed in 1965. This group consisted of six institutions that traded shares among themselves through open bidding. This initiative positioned Ethiopia among a select group of African nations with a comprehensive stock market.
Planning and Development
Establishing a securities exchange in Ethiopia has been planned for several years. The Ethiopian government has made efforts since 2019 for this vision. In 2023, Ethiopia started selling shares for the ESX setup. This effort aligns with homegrown economic reform's aim to diversify the Ethiopian economy.
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Key Milestones
- April 7, 2024: NGX Group confirmed an investment in the Ethiopia Securities Exchange.
- January 10, 2025: The ESX launched with Wegagen Bank as the first company to be listed.
Objectives and Supervision
ESX aims to provide a fundraising platform mainly for small and medium-sized enterprises, the backbone of the Ethiopian economy. The Ethiopian Capital Market Authority (ECMA) supervises ESX. ESX will enable trading of existing securities, kindling a secondary market in Ethiopia.
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Legal Framework and Collaboration
The Ethiopian Proclamation (No. 1248/2021) states that the government, in collaboration with the private sector, including foreign investors, will establish the exchange. Its launch was seen as a catalyst for private sector investment. It will act as a privatization platform for Ethiopia's state-owned enterprises and assist businesses, including SMEs, in capital raising.
Ownership and Key People
25% of ESX is owned by Ethiopian Investment Holdings. Tilahun E. is one of the key people involved in the ESX.
Role and Impact
The establishment of the ESX is expected to play a crucial role in the Ethiopian economy. It will act as a privatization platform for Ethiopia's state-owned enterprises and assist businesses, including SMEs, in capital raising. ESX aims to provide a fundraising platform mainly for small and medium-sized enterprises, the backbone of the Ethiopian economy. It will enable trading of existing securities, kindling a secondary market in Ethiopia.
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