Ethiopia to open stock exchange after 50 years, reveals how much it will make in first IPO 

In 2023, Ethiopia faced significant economic challenges, with inflation exceeding 30%, but by 2024, it had stabilized at 23.95% despite ongoing tensions with Amhara militiamen.

To bolster its economy, the Ethiopian government is initiating a domestic bourse, starting with the initial public offering (IPO) of shares in Ethio Telecom.

Ethiopia Investment Holdings, which manages 40 state-owned enterprises, aims to raise up to 30 billion birr (about $234 million) through this IPO.

This marks a critical step in revitalizing the exchange, as noted by Tilahun Kassahun, CEO of the Ethiopian Securities Exchange, which will officially open this Friday.

Ethiopia previously had a stock market from 1960 until Emperor Haile Selassie’s overthrow in 1974 led to its dissolution.

Looking ahead, Kassahun envisions listing up to 50 companies in the next five years, with some joining via a listing by introduction, bypassing the IPO process.

Over the past decade, Ethiopia’s GDP has experienced a downward trend from a peak of 10.4% in 2014. Following that high, GDP declined to 8% in 2015, even as year-on-year inflation rose, reaching 9.4% in May 2015, primarily due to high food prices.

From that point, Ethiopia’s GDP remained volatile, plummeting to a low of 6.1% in 2019 amid civil unrest that started in Addis Ababa and spread throughout the Oromia region, disrupting economic activities.

However, from 2019 to 2024, the economy began a gradual recovery despite ongoing inflation challenges and unrest from Amhara militiamen, with GDP projected to reach 8% by 2024. This gradual rise marks a hopeful turn for Ethiopia’s economic landscape.

James Johnstone, co-head of emerging and frontier markets at Redwheel, stated, “The opening of a domestic stock exchange is a key part of the economic and political transition of a frontier market.”

He noted the current lack of international investment in rapidly growing economies and expressed enthusiasm for the potential opportunities, given that Redwheel manages $8 billion in assets.

Conversely, Mark Bohlund, a senior credit research analyst, raised concerns about ongoing insurgencies, saying, “It is hard to see how the current government will be able to reestablish a centralization of political power and effective governance.”  

He highlighted that fluctuating currency values and high inflation create a difficult landscape for businesses, complicating planning and discouraging potential investors from entering the market.