For more than five decades, Ethiopia held the dubious distinction of being the most populated second nation in Africa and one of the fastest economies without stock market market.
On January 10, he lost the label with the revival of the Ethiopian Securities Exchange (ESX). For Prime Minister Abiy Ahmed, ringing the bell to mark the opening of ESX was an important opportunity and another feather in his philosophy of economic liberalization.
Until now, ESX has a list, by Wegogen Bank. The scholarship is optimistic of at least 100 lists over the next 10 years. It will be used for both canal to privatize public enterprises, starting with Ethio Telecom and to raise capital for companies. To encourage lists, the government offers tax incentives and the softening of regulatory bottlenecks.
The revival of ESX comes after critical reforms such as the opening of the banking sector to foreigners and the Forex flotation.
“The ESX offers the private sector a solid platform to increase capital with much lower costs,” explains Mered Fikireyohannes, CEO of Pragma Investment Advisory.
Ethiopia worked without a solid mechanism for equitable access to capital and liquidity, according to FSD Africa, which helped create ESX. The most obvious was the inability of banks to lend themselves effectively due to the lack of an interbank trading platform. This highlighted the ineffectiveness of liquidity management and high interest rates for borrowers, in particular SMEs.
The fight against the constraints of cheap and long -term financing will change the situation for companies. By creating a platform for initial public offers, rights, private internships, business bonds and other innovative financial instruments, this means that companies will be able to attract capital from a large pool of investors from Retail and institutional, local and foreign sale.
In addition, the injection of dynamism on the debt market will see less credit scrolling on the domestic market. Currently, the Ethiopia actions of the interior debt amount to $ 40 billion, or 59% of total public debt. This indicates that the government was an important factor in eliminating the private sector from the credit market, which has aroused high interest rates.