Ethiopia's Business Community in Limbo Regarding Stock Exchange

Ethiopia's Business Community in Limbo Regarding Stock Exchange
Members of the Addis Ababa business community have disclosed that they have been left out by the government in establishing the Addis Ababa Stock Exchange. At a business forum organized by the Addis Ababa Chamber of Commerce and Sectoral Associations at the Hilton Addis Ababa on Thursday, members of the business community said that though they are excited about the government's plan to establish the Addis Ababa Stock Exchange by 2020 the government officials are not providing relevant information about the establishment of the stock exchange.

"Apart from the news we read on local newspapers the concerned authorities are not telling us what they are doing," a businessman said. "The government was supposed to consult with the private sector and provide progress update on the establishment of the stock exchange. However, sadly we are left in the dark we do not know what the government is doing. They are working behind the curtain," he added.

A lady, who is a business consultant, stated that the business community does not have a clue weather the required regulations and infrastructure are in place or not. "Kenya has established a stock exchange many years ago but it is not running efficiently. If we are establishing the stock exchange for the sake of having one it would be meaningless," she added.

At the business forum with the theme "Challenges and Prospects of Establishing Stock Market in Ethiopia" Tesfaye Hailemichael, Senior VP at Cerberus Frontier, guest speaker, highlighted the benefits of having a stock market and the list of regulations and infrastructure that need to be fulfilled to establish a stock market.

Tesfaye said a stock market is a useful platform to raise capital for businesses. He said that companies can raise capital from foreign and local sources using electronic trading mechanism. "Companies may sell stocks to expand or introduce new products," he said. "There is high risk and reward in stock exchange," he added.

There are 29 stock exchanges in Africa and 35 countries participate in stock markets. Johannesburg, Egypt, Casablanca, and Nigeria are the major Stock Exchanges in the continent.

Tesfaye stressed the list of things that are required to establish a well-functioning stock market. Strong stock market regulation and regulatory organ is the primary prerequisite for the establishment of a stock market. "Without a rule you cannot have a football match. Likewise you cannot have a stock exchange without a regulation that can be enforced," Tesfaye said.

Location, infrastructure, data center, reliable internet and power supply are some of the utilities that must be put in place to have an effective stock exchange. "We need to have professional IT experts," Tesfaye said.

According to him, a securities and exchange commission that regulates the stock market should be established. Accounting oversight board, investment banks, certified auditing firms, brokerage firms and underwriters are some of the institutions that should be in place.

Tesfaye said that the legislative body, the House of People's Representatives, and the Office of the Attorney General should have a good knowledge of stock exchange. "They should have advisers that consult them on this matter," he said. "Is it possible to have a stock exchange in Ethiopia by 2020?" he asked the audience.

Members of the business community reflected optimistically about the planned Addis Ababa Stock Exchange. "It is a big business opportunity. It is useful for the development of the country and we should start it," a businessman said. Read...

James Koroma