Ethiopia Launches New Stock Market to Attract Investors Amid Challenges
Ethiopia is set to open a stock exchange, aiming to draw investors while navigating post-civil war recovery and regional tensions
Ethiopia, Stock Market, Investors, Abiy Ahmed, Ethio Telecom
Addis Ababa: Ethiopia is finally opening a stock exchange after 50 years. This move is part of the country’s effort to attract investors while it deals with the aftermath of a civil war and ongoing regional conflicts.
The Ethiopian government is selling shares in Ethio Telecom, hoping to raise around 30 billion birr, which is about $234 million. This is just the beginning, as they plan to list more companies soon.
Over the last decade, Ethiopia’s economy has grown by an average of 8%, despite the challenges of conflict that have taken a heavy toll. Now, Prime Minister Abiy Ahmed is keen to bring in investors to create jobs, especially for the youth, where unemployment is a big issue.
Experts see the stock exchange as a crucial step in the country’s economic and political transition. They believe there are great opportunities in these emerging markets, even though international investment has been limited.
One of the biggest changes was lifting the government’s tight grip on the currency, which opened the door for $20 billion in financing from the World Bank and the IMF. Ethiopia is also making it easier for investors to move their money around.
However, the country still faces challenges, like having only $1.5 billion in reserves as of March. While a recent IMF deal will help, liquidity is still a concern.
Investors might find similarities with Nigeria, which had its own struggles with currency transfers. To prevent quick money flows, the government plans to set rules for minimum investment periods.
Interestingly, Ethiopia had a stock market for 14 years until 1974, when it was shut down. Now, they aim to list up to 50 companies in the next five years, although the exact number is still uncertain.
Since the peace agreement in 2022, the government has allowed foreign banks to operate and approved investments in various sectors. But there are still hurdles, like the lack of brokers and custodians in the new exchange.
Investors will also be watching how the country handles its eurobonds, as this will impact their confidence in the new market. The government believes that now that they’ve tackled the major issues, moving forward should be easier.
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