Ethiopia is opening its doors to investment banks for the first time.

Reuters reports that the Justice Ministry has authorised the Ethiopian Capital Market Authority to start issuing licences to the banks, ahead of the country’s planned introduction of a securities exchange later this year.

This is all part of a liberalisation programme by Prime Minister Abiy Ahmed to open Ethiopia to more private investment.

Brook Taye, director-general of the market authority, says the biggest bottleneck in the Ethiopian economy is the lack of capital-raising avenues, since no investment banks currently operate in the country.

Businesses must pay 25% interest on funding from commercial banks as well as provide collateral worth 70% of the loan’s value, he says.

In addition to global and regional investment banks, those who can apply for licences includes securities brokers and dealers and credit rating services providers who can help businesses list shares on the new securities exchange and issue corporate debt.

The new securities exchange will be partly owned by Ethiopian commercial bank Zemen, which has bought a 5% share.

23 January 2024
Image: Freepik