The Nigerian Exchange Group (NGX) has acquired an undisclosed stake in Ethiopia’s inaugural securities exchange, marking a significant development in the fundraising efforts that have surpassed expectations.
The Ethiopian Securities Exchange (ESX) aimed to raise $11.07 million last year to kickstart operations, aligning with Prime Minister Abiy Ahmed’s broader agenda to modernise and liberalise the economy.
“We are delighted to have exceeded our capital raise target and are encouraged by the strong investor confidence in the long-term prospects of both ESX,” stated Tilahun Kassahun, Chief Executive of ESX.
In the ESX ownership structure, the Ethiopian government, through Ethiopian Investment Holdings (EIH) and its subsidiaries including Ethiotelecom and Commercial Bank of Ethiopia, will retain a 25% stake, while private and institutional investors will collectively hold a 75% stake.
NGX Group, alongside FSD Africa and the Trade and Development Bank Group (TDB), has emerged as a key institutional investor, injecting capital into ESX to facilitate its operationalization. These strategic foreign investments are essential in transferring technical expertise, best practices, and fostering long-term strategic partnerships.
“Strategic foreign investments by TDB, FSD Africa, and [the] NGX Group are particularly important in allowing the transfer of technical know-how and best practices as well as other areas of long-term strategic value that we will explore,” Kassahun said.
With NGX’s extensive experience as one of Africa’s largest securities exchanges boasting a market capitalization of ₦58.66 trillion ($41.8 billion), ESX stands to benefit from technical support in structuring the exchange, refining trading regulations, and marketing strategies. The collaboration has already yielded tangible outcomes, including the development of a comprehensive rule book to govern ESX’s operations.
Moreover, ESX successfully concluded its fundraising campaign with commitments from domestic investors, including 16 local banks, 12 insurance firms, and 17 private entities. The exchange is poised to launch later this year, thereby enhancing Ethiopia’s attractiveness to foreign investors and stimulating economic growth in the populous Horn of Africa nation.
While Prime Minister Ahmed’s administration has made strides in liberalising Ethiopia’s economy, state control remains prevalent, limiting private sector participation. Notably, the absence of investment banks underscores the reliance on commercial banks for capital raising endeavours, signaling the need for further reforms to foster a more diverse and dynamic financial ecosystem.
