In a move signaling deeper economic ties between Africa’s two most populous nations, Nigeria has announced its commitment to supporting Ethiopia’s newly launched securities exchange, the Ethiopian Securities Exchange (ESX). This development marks a significant step in the economic liberalization of Ethiopia and underscores Nigeria’s role in fostering regional financial integration.
The Nigerian Exchange Group Plc (NGX) has taken a proactive stance by acquiring a 5% shareholding in the ESX. This investment is part of NGX’s broader strategy to expand capital market activities across East Africa and the continent at large. “Our investment in the Ethiopian Securities Exchange is a testament to our belief in the potential of African capital markets to drive economic growth and integration,” said a spokesperson from NGX.
Ethiopia’s venture into establishing its first securities exchange in over fifty years comes at a time when the country is pushing for economic reforms under Prime Minister Abiy Ahmed. The ESX aims to provide a platform for both local and international investors to engage with Ethiopia’s rapidly growing economy, particularly by enabling the privatization of state-owned enterprises.
The ESX, launched recently, is not just a revival of Ethiopia’s capital market but an initiative to attract private investment, increase market liquidity, and encourage savings. The Ethiopian government has been working towards this milestone since 2018, with the involvement of international partners like FSD Africa, which has provided technical support and funding.
Nigeria’s involvement includes not only financial backing but also sharing expertise gained from years of operating the Nigerian Stock Exchange, which has one of Africa’s most vibrant capital markets. This collaboration could potentially lead to knowledge transfer, helping Ethiopia navigate the complexities of running a modern securities exchange.
“By supporting Ethiopia in this endeavor, Nigeria is not just aiding in the economic development of a sister nation but also expanding the footprint of African financial markets,” commented an economic analyst from Lagos. This partnership could pave the way for more integrated financial systems across Africa, potentially leading to increased cross-border investments and a more unified approach to capital market development.
The Ethiopian Securities Exchange has already seen its first listing with Ethio Telecom, signaling the start of what could be a new era for Ethiopia’s financial sector. The government’s plan to list at least 50 companies on the exchange at launch demonstrates ambitious goals for economic diversification and private sector growth.
In light of this development, posts on X have highlighted the potential benefits for both countries, with some users from Nigeria expressing pride in their country’s role in supporting African economic initiatives. However, there’s also a call for caution, emphasizing the need for transparency, good governance, and sustainable practices in the operation of the new exchange.
As Ethiopia opens its doors to foreign investors through its securities exchange, Nigeria’s support could be a catalyst for further economic partnerships and mutual growth, setting a precedent for how African nations can collaborate for continental economic upliftment.