Launch Partners

Launch Partners

Ethiopia launches securities exchange; includes Shariah compliant securities

ETHIOPIA: Ethiopia officially launched its first organized securities exchange, the Ethiopian Securities Exchange (ESX), at an event officiated by Prime Minister Dr Abiy Ahmed on the 10th January 2025. The ESX, which also welcomes Shariah compliant securities, is a partnership between Ethiopia Investment Holdings, the country’s sovereign wealth fund and the Ministry of Finance, with support from organizations such as Financial Sector Deepening (FSD) Africa and FSD Ethiopia.

Licensed by the Ethiopian Capital Market Authority in December 2024, the ESX is expected to address Ethiopia’s challenges in the financial sector including limited access to capital and inefficient liquidity management. For long, the country lacked an interbank trading platform, which has hindered the ability of banks to lend to one another and led to high borrowing costs and constraints on business financing, especially for SMEs.

To course correct, the ESX has introduced an interbank trading platform to improve liquidity and facilitate credit flow within the banking system. In November 2024, Wegagen Bank and Awash International Bank (AIB) became the first financial institutions to transact on this platform, with Wegagen extending an ETB50 million (US$397,126.48) overnight loan to AIB in an initial auction.

Since its pilot phase initiated in October 2024, the platform has facilitated trades exceeding US$1.1 billion, indicating strong uptake. Additionally, Wegagen Bank became the first company to be listed on the ESX.

Tilahun Esmael Kassahun, CEO of the ESX, stated: “We see the new securities exchange as a multi-faceted financial infrastructure, providing multiple markets and a variety of products, catering for different types of issuers and investors. The fixed-income market will provide a platform to list and trade debt instruments including treasury bills and bonds, corporate bonds and Shariah compliant securities such as Sukuk,” emphasizing the importance of deepening the debt market.

The exchange will use a multi-asset electronic trading platform integrated with a central securities depository for post-trade settlement and clearing. It will issue and trade financial instruments including equities, treasury bills, corporate bonds and derivatives, among others.

“The launch of the ESX is a true game-changer for the country. As an organization running development finance programs in well over thirty African countries, we know only too well the impact well-functioning and modern capital markets can have in catalyzing economic growth. We are proud to have played a role in the development of this exchange, that will undoubtedly spur equity, fixed income and other innovative financial instruments,” noted Mark Napier, the CEO of FSD Africa.

The launch follows economic reforms in Ethiopia including the floating of the national currency, the birr, opening the banking sector to foreign competition and advancing capital market development.

Categories:

Restricted Access

Subscribe NOW and get:

  • Gain unlimited access through all key operating platforms
  • Full access to all listed Islamic funds & fund profiles
  • Unlimited access to all Islamic fund managers
  • Access to all exclusive articles, reports, podcasts & videos
  • Complimentary access to all IFN Investor Forums
Subscribe Now

Suggested for you