Ethiopia recently inaugurated its stock exchange, marking a significant milestone as the 30th stock exchange in Africa. The Ethiopian Stock Exchange (ESX) commenced operations by listing Wegagen Bank, a tier-2 bank with substantial assets. However, the absence of other anticipated listings, like Ethio Telecom, raises concerns about the ability of African stock markets to attract major companies.
This trend is reflected in other African stock markets, such as South Africa’s Johannesburg Stock Exchange, Egypt’s stock market, Nigeria’s bourse, and Kenya’s Nairobi Securities Exchange, which have experienced challenges in attracting new listings and investor participation.
Some companies opt for cross-listing on foreign exchanges due to the limitations of local bourses. While cross-listing presents opportunities, it also brings regulatory complexities for companies. Ethiopia has the potential to draw foreign players for cross-listing, enhancing liquidity and investor confidence in its market.
Despite macroeconomic challenges, Ethiopia can create a conducive environment for foreign investors by offering clear regulatory frameworks. This would not only attract foreign players but also encourage local participation, fostering a robust and sustainable market in the long run.