ADDIS ABABA – The issuance of securities exchanges directive would highly contribute to administer capital investment flow and facilitate national economic growth, said Economic Researcher.
Ethiopian Economic Association (ECA) Researcher and Haramaya University Economics Lecturer Molla Alemayehu (PhD) told The Ethiopian Herald that the issuance of the directive on licensing, operation and supervision of securities exchanges would facilitate to invest capital in effective sectors.
The main weakness of many African countries is inability to control capital outflow, for this reason, the great portion of some countries’ GDP outflows to developed countries every year affecting the economic growth of these African nations, he mentioned.
As a result, he said that such directive is decisive to overcome this and others problems.
The securities exchanges ensures strong control and supervision of capital investment thereby facilitating fair capital investment, Molla noted.
Hence, it also serves as a directive by transforming effectiveness and fairness of investments, he added.
“I hope the directive will contain the main issues taking lessons and best practices from other countries. Ethiopia’s move was expected to happen. It would have a positive impact in capital investment.”
According to the Lecturer,the national investment activities were ineffective and the country was achieving poor results due to lack of the directive. Therefore, the recently approved directive would create a conducive environment to overcome this challenge.
Furthermore, the effort requires ensuring the proper implementation of this directive and filling gaps to achieve better performance, he stated.
On Tuesday, the Ethiopian Capital Market Authority (ECMA) announced the issuance of a groundbreaking directive that will enable the licensing of the first securities exchange in Ethiopia. It prepared and registered the “Directive on licensing, operation, and supervision of securities exchanges.”
The Authority announced that the directive sets forth the documentation, related terms, and requirements necessary to obtaina license for operating exchanges and over-the-counter markets. It outlines the supervisory framework for exchanges, the need for internal regulations approved by the authority, reporting obligations to the authority, and various standards governing the process.
For the first time in Ethiopia, this directive facilitates the licensing of securities and over-the-counter markets. It enables both government and private companies to utilize the market for selling shares and bonds, thereby creating a conducive environment for raising capital and undertaking significant projects, ECMA said.
Moreover, the directive establishes a transparent and controlled trading system for service providers with market licenses to buy and sell securities, according to Authority.
It believed to consolidate the previously fragmented securities trading in Ethiopia into a single licensed and regulated market, enhancing the sector’s contribution to stakeholders and the national economy. It also paves the way for the Ethiopian Securities Exchange S.C. to commence operations by granting an exchange license, it was learnt.
BY TSEGAYE TILAHUN
THE ETHIOPIAN HERALD THURSDAY 18 JULY 2024
