Ethiopia, a land of rich cultural heritage and abundant resources, has been making significant strides towards economic development in recent years. One of the key drivers of this progress has been the Ethiopian Capital Market Authority (CMA), which plays a vital role in fostering a vibrant and robust capital market. With a focus on enhancing investor confidence and promoting sustainable economic growth, the CMA has become an instrumental institution in Ethiopia’s journey towards prosperity.
The Ethiopian Capital Market Authority has been actively engaged in establishing and enforcing a robust regulatory framework for the capital market. It has implemented stringent rules and regulations to ensure transparency, accountability, and fair practices. These measures have not only protected the interests of investors but have also bolstered confidence in the market, attracting both domestic and foreign investments.
In enhancing market infrastructure, recognizing the importance of a sound market infrastructure, the CMA has made significant investments to strengthen the capital market ecosystem. It has worked towards improving trading systems, settlement processes, and information dissemination mechanisms, thus ensuring efficient and seamless operations. These efforts have facilitated increased liquidity and improved accessibility for investors, making the market more attractive and dynamic. According to documents obtained from the authority and investment commission.
Regarding promoting investor education and awareness, the CMA has been proactive in promoting investor education and awareness programs across Ethiopia. It recognizes the importance of equipping investors with the necessary knowledge and skills to make informed investment decisions. By conducting seminars, workshops, and awareness campaigns, the CMA has empowered investors to understand the risks and rewards associated with capital market investments, thereby fostering a culture of responsible investing.
Ethiopia’s capital market has witnessed a growing interest from foreign investors, thanks to the CMA’s efforts to create an investor-friendly environment. The authority has implemented policies to facilitate foreign direct investment, streamline regulatory procedures, and ensure a level playing field for all market participants. This has resulted in increased foreign capital inflows, contributing to the overall development of the economy.
The Ethiopian Capital Market Authority recognizes the importance of collaboration with international partners to strengthen the capital market further. It has established strategic partnerships with regulatory bodies and financial institutions from around the world. Through knowledge sharing, capacity building initiatives, and technical assistance, the CMA has benefited from global best practices, enabling it to enhance its regulatory framework and market infrastructure.
As to documents, recent developments in the Ethiopian capital market showcase the commitment of the CMA to driving economic growth. In 2023, the authority introduced a new electronic trading platform, enabling seamless and efficient trading of securities. Additionally, it launched a bond market to diversify investment options and mobilize capital for infrastructure development projects. These initiatives have garnered positive responses from investors, signaling a promising future for the Ethiopian capital market.
The Ethiopian Capital Market Authority’s unwavering commitment to enhancing the economy and promoting investor confidence has yielded encouraging results. By establishing a strong regulatory framework, enhancing market infrastructure, promoting investor education, attracting foreign investments, and collaborating with international partners, the CMA has played a pivotal role in driving economic growth and creating a vibrant capital market in Ethiopia. As the authority continues to implement innovative measures and adapt to changing market dynamics, the future looks bright for Ethiopia’s capital market and its contributions to the nation’s overall development.
Based on the implementation of the Capital Market Service Providers Licensing and Supervision Directive (No. 980/2024), the Ethiopian Capital Market Authority is pleased to announce that it will be accepting applications for Capital Market Service Providers in two weeks!
The authority encourages those who are interested to work in the sector to make sure they meet the license requirements set by the directive and make the necessary preparations.
The Ethiopian Press Agency formerly reported that Preparations for launching the capital market in Addis Ababa were being completed, the Ethiopian Capital Market Authority announced.
Capital Market Senior Advisor with the authority Solomon Gebre told the Ethiopian Press Agency (EPA) that preparations have been going on for the past year and a half to launch the capital market, which is supposed to start in 2023/2024.
Solomon further noted that the authority has done a lot of work regarding the legal framework of the capital market and 10 guidelines and two regulations containing details have been drafted based on the decree issued a year and a half ago. Moreover, three of the guidelines have been collected from the public and have been registered by the prosecutor, while one of the guidelines has been sent to the Council of Ministers for a final ratification.
Since the capital market is just starting in Ethiopia, awareness has been created for the companies involved in the sector. In this way, 600 people from financial institutions, banks and also those who are interested in the sector have been trained. “One of our main focuses are making the service should not be limited to Addis Ababa but be expanded to different states and areas,” he said.
According to the advisor, a growing number of investors are showing great interest in participating in the capital market and meaningful participation has been seen in the last six months. “Although the domestic investor was skeptical at first, now the confidence and nature of the project is showing high interest,” he added.
Because of the capital market will bring many opportunities and changes, it is necessary to prepare to satisfy the society’s expectation and enshrines Ethiopia’s overall progress, he advised. As part of its attempt to build a diversified and vibrant economy, Ethiopia is working to establish capital market whereby a long-term debt (over a year) or equity-backed securities are bought and sold.
Recently, the Ethiopian Capital Market Authority hosted a press conference to discuss significant developments in the capital markets sector, particularly regarding the adoption of the Capital Markets Service Providers and Supervision Directive. The Director General Brook Taye (PhD) shed light on the pivotal role of this directive in enhancing the regulatory landscape and ensuring the integrity and stability of the capital markets.
Furthermore, the Director General provided insights into the ongoing drafting process of the Public Offer Directive, emphasizing their commitment to fostering transparency and investor protection. This directive underscores their dedication to facilitating fair and efficient capital raising activities while upholding the highest standards of accountability.
During the session, the Director General unveiled the authority’s forward-looking agenda for the upcoming six months, outlining key initiatives and priorities aimed at advancing the interests of investors and market participants alike.
In the interactive Q&A session, he addressed pressing inquiries, including collaborations with media regulating bodies to combat deceptive advertisements targeting investors. “We remain steadfast in our mission to safeguard investors from fraudulent schemes and deceptive practices, working closely with relevant stakeholders to uphold market integrity,” he underlined.
Additionally, the discussion touched upon the types of licenses that will be granted starting Monday, marking a significant milestone in streamlining regulatory processes and promoting innovation within the financial services industry. The Ethiopian Capital Market Authority (ECMA) has announced its readiness to grant licenses to participants, marking a significant advancement in the long-awaited launch of the capital market. However, the establishment of subsidiaries by local retail banks, as permitted by a central bank directive, is still pending.
BY LAKACHEW ATINAFU
THE ETHIOPIAN HERALD SUNDAY EDITION 18 FEBRUARY 2024
