The Ethiopian government has decided to exclude diaspora citizens and foreign nationals from participating in the initial public offering (IPO) of Ethio Telecom, a state-owned telecommunications company holding a 95% market share. This move comes ahead of the launch of the Ethiopian Securities Exchange (ESX), the country’s first-ever stock exchange, expected to commence operations soon.
With plans to raise $255 million by selling a 10% stake in Ethio Telecom through Ethiopian Investment Holdings (EIH), the government’s decision to limit the IPO to Ethiopian citizens physically present in the country may impact the development of open capital markets. Prime Minister Abiy Ahmed’s goal of liberalizing the financial sector and advancing the economy might face challenges due to this restriction on diaspora and foreign investors.
Despite the entry of a Safaricom-led consortium in 2022 aimed at opening up Ethiopia’s telecommunications sector, Ethio Telecom continues to dominate with a substantial market share. The company’s strong customer satisfaction and quality services have solidified its position in the market.
Additionally, the Ethiopian sovereign wealth fund, EIH, intends to list its major investments, including Ethiopian Shipping and Logistics Services and Ethiopian Insurance Corporation. ESX, which raised $26.6 million from investors to establish the stock exchange, plans to list over 10 companies by the end of 2025, attracting foreign investments in key sectors like insurance, banking, and telecoms.
Noteworthy institutional investors in ESX include the Nigerian Exchange Group (NGX) with a 5% stake, as well as entities like FSD Africa and Trade and Development Bank Group (TDB). These investments signal a growing interest in Ethiopia’s emerging capital markets and potential for foreign participation in the country’s economic development.