ADDIS ABABA– The Ethiopian Securities Exchange (ESX) would play a due role in paving the way towards the development of Ethiopian capital markets, experts so remarked.
In an exclusive interview with The Ethiopian Herald, ESX Senior Project Manager Tilahun E. Kassahun (PhD) said that the Ethiopian capital markets would create golden opportunities for the public and private sectors in terms of meeting capital financing needs.
He further stated that putting in place a successful ESX heavily depends on the involvement and participation of market participants including issuers, investors, capital service providers, and policy makers.
“The Government of Ethiopia’s commitment to privatize certain state owned assets for public ownership through the Ethiopian Investment Holdings (EIH), which is playing an enormous role in supporting the development of the capital market by listing these public assets on the ESX,” he noted.
Tilahun (PhD) said: “Not only will the platform support the exchange in developing its initial pipeline of portfolio of companies but it also democratizes the public ownership of given assets apart from being transparent and available for every Ethiopian across the country, including the Ethiopian Diaspora.”
“A well-functioning interbank market contributes a lot to the efficient allocation of capital in the economy, provides a central bank with a well-tested tool in the implementation and transmission of monetary policy as central banks globally use the short-term interbank market to monitor and influence prices; the liquidity of the banking system and the structure of short-term interest rates would be of great importance in stabilizing the economic cycles,” he stated.
Innovative Finance and Capital Markets Section Chief at ECA, Sonia Essob madje on her part said that strong capital markets mobilize additional savings into the national economy, making more capital available to companies thereby creating jobs and facilitating real-wage growth.
“It is therefore, very commendable to create a virtuous circle that would ultimately benefit the economy as a whole,” she added. She also remarked that the state-of-the-art platform would bring an opportunity to transform the lives of Ethiopians through a modernized financial system and provide investment opportunities and risk management tools, enhance financial stability and create inclusive and resilient economic growth.
Efforts are exerted to develop Ethiopia’s financial market as the government has made preparations to launch its first-ever ESX in 2024. Here, the Economic Commission for Africa (ECA) is committed to partnering with Ethiopia on this groundbreaking financial market initiative.
“Macroeconomic stability, financial sector development, a sound legal and institutional environment as well as adequate infrastructure are prerequisites for the development of the capital market,” she underscored.
She further recommended that the country needs to build capacity of market players such as investors, financial institutions, design conducive rules and regulations and set up solid infrastructure among others to have a successful capital market.
BY ASHENAFI ANIMUT
THE ETHIOPIAN HERALD TUESDAY 11 JULY 2023
