Ethiopia’s Dance With a Nascent Stock Market
By Aksah Italo
Published on 09/08/25
The aura of capitalism and the pulse of the marketplace have finally converged in Ethiopia, where the dawn of a stock exchange signals the nation’s coming of age in the global financial order.
This milestone arrives as Prime Minister Abiy Ahmed’s (PhD) administration pursues unprecedented financial reforms—opening the sector to foreign capital, introducing central depository systems, and launching digital trading platforms.
The birth of the Ethiopian Securities Exchange (ESX), guided by Tilahun Kassahun (PhD), marked an extraordinary chapter in the nation’s financial history. Its official launch in January 2025 was sealed when the Prime Minister rang the inaugural bell, opening Ethiopia’s first-ever stock exchange.
Banks at the Forefront
Commercial banks have rushed to embrace the new market, emerging like dandelions after the first rain. Once content with deposits and loans, they now stand at the center of a new enthusiasm. The sector, once defined by interest income, is morphing into a more ambitious model—floating shares, underwriting securities, and driving mergers.
Wegagen Bank led the way, registering with the Ethiopian Capital Market Authority (ECMA) to list 6.2 million shares with a paid-up capital of 6.2 billion Br. Soon after, Gadaa Bank followed with 1.2 million shares.
At a public briefing, Gadaa Bank’s president, Wolde Bulto, explained that the listing not only boosts liquidity but also extends financial services to underserved markets:
“It broadens our reach and supports our drive to innovate,” he said.
Banks are no longer confined to the secondary market. They are grafting investment-banking arms onto their franchises. Wegagen and the state-owned Commercial Bank of Ethiopia (CBE) are at the vanguard, with Awash, Gadaa, and Siinqee close behind.
Regulators in Motion
The National Bank of Ethiopia (NBE) has worked furiously to balance the promise of this new capital market with the need to protect the traditional banking sector.
Wegagen pioneered Ethiopia’s first licensed investment bank with 358 million Br in capital. CBE followed with CBE Capital Investment Bank, in partnership with Dalol Capital, under the stewardship of Zemedeneh Negatu.
The ECMA has also issued licenses to other players: Ethio Fidelity SC, Equation Security Advisor Plc, and HST Investment Advisors Plc.
Ethio Fidelity Securities S.C., the country’s first securities dealer, began operations with 50 million Br in capital, well above the Authority’s 10 million Br minimum. Its founding members include Abebaw Zewedu, Yima Shewa Siyum, Abebaw Molla, Zelalem Werku, and Mesfin Zeberga. CEO Anteneh Kassa highlights its central role in maintaining liquidity:
“Share trades can now be executed quickly through dealers,” he said.
HST Investment Advisors Plc, led by veteran auditor Tewedaj Gezahegn, launched with 1.5 million Br in capital—triple the regulatory minimum.
Telecom IPO: A Sobering Test
If banks embody optimism, Ethio Telecom’s Initial Public Offering (IPO) reveals the limits of investor enthusiasm.
In October 2024, the administration floated a portion of Ethio Telecom shares. The IPO raised only 3.2 billion Br, a tenth of its target. CEO Frehiwot Tamiru remains optimistic, planning a second round aimed at institutional investors, banks, insurers, and the diaspora.
Experts, however, point to overvaluation, weak governance, and thin liquidity as major risks. Finance expert Worku Lemma warns:
“Buyers should be aware of the limited power they have.”
Despite these concerns, Ethio Telecom remains dominant—holding a 94.5% market share, serving 78.3 million subscribers, and generating 91.4 billion Br in revenue last year, up from 71.5 billion Br in 2023.
A Long Road to Maturity
Ethiopia’s flirtation with share trading is not new. In the 1960s, the State Bank of Ethiopia oversaw a modest exchange, later dismantled by the 1974 revolution. Nearly five decades later, with UNDP support, a 10-year plan under the NBE paved the way for ECMA.
Now led by Hana Tehelku, ECMA has set ambitious goals: 90 listed companies, four million investors, and 1.26 billion Br in subscribed capital.
Still, the market remains fragile, vulnerable to inexperience and limited awareness. Investor trust, transparency, and credible governance will determine whether Ethiopia’s capital market flourishes or falters.
Treasury Bills: From Obligation to Opportunity
Treasury bills (T-bills), once instruments of fiscal coercion, have been reborn as investment tools. A bi-monthly auction system introduced under former NBE governor Mamo Mihretu attracted 53 billion Br in offers at its first round, signaling a dramatic shift in investor appetite.
The Road Ahead
Worku Lemma stresses that Ethiopia’s first steps into stock trading must be matched by capacity building, transparent reporting, and robust governance:
“Many investors are simply waiting to find companies they can trust,” he remarked.
Whether Ethiopia’s capital market becomes a pillar of financial modernity—or stumbles under the weight of inexperience—will depend on how quickly institutions and investors adapt to this new chapter.