Ethiopian Capital Market update

Ethiopia’s House of Representatives has tabled a bill outlining the establishment of an Ethiopian capital market for the trade of shares, bonds, and other corporate derivatives. The bill was approved by the Ethiopian Council of Ministers last month after being submitted by the National Bank of Ethiopia.

The market is expected to create an avenue for investors to meet entrepreneurs and facilitate better returns for investors and viable returns for businesses. 

Furthermore, the market is expected to protect investors from fraudulent activities by providing a centralized and trackable investment structure. One of the main issues in the Ethiopian economy is the fragmented and uncoordinated share markets.

The bill is also expected to lead to the establishment of a separate and autonomous federal regulatory agency that is going to answer directly to the Prime Minister who is also going to select the Director-General (who is going to be a non-voting member of the board of directors). The board will be composed of seven members including the Director of NBE and the Director the Accounting and Audit Board of Ethiopia.

Licensing is also going to be part of the purview of the agency. As of now, the agency is expected to give licenses to any entity operating security, derivative, and other exchanges and other capital market services.

The bill has now been submitted to the Ethiopian Ministry of Trade and Industry’s Standing Committee for further revisions.

The Reporter

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