Nigerian Exchange Group acquires stake in Ethiopia’s first-ever securities exchange according to reports. The Nigerian Exchange Group (NGX), previously known as the Nigerian Stock Exchange, has acquired a share in Ethiopia’s inaugural securities exchange. The exact amount of the investment remains undisclosed.
Ethiopia’s First-Ever Securities Exchange
The fundraising drive, which started in the middle of 2023, has successfully gathered 1.51 billion birr ($26.6 million), surpassing the initial goal by 879 million birr ($15.53 million). This achievement aligns with Prime Minister Abiy Ahmed’s broader economic reform agenda, aimed at modernizing and liberalizing Ethiopia’s economy.
In support of this agenda, the Ethiopian Securities Exchange (ESX) aimed to raise 631 million birr ($11.07 million) to initiate its operations. The ESX is set to commence operations later in 2024. Tilahun Kassahun, the CEO of ESX, announced this progress during a press conference held in Addis Ababa, Ethiopia.
“We are thrilled to have exceeded all our expectations in terms of the capital raise and are excited by the overwhelming confidence shown by investors in the long-term prospects of both ESX,” Kassahun stated.
The Ethiopian Government Will Maintain A 25% Ownership Stake in the ESX
The Ethiopian government will maintain a 25% ownership stake in the ESX through Ethiopian Investment Holdings (EIH) and its affiliates, Ethiotelecom and Commercial Bank of Ethiopia. The remaining 75% ownership interest will be distributed among private and institutional investors.
The ESX Has Started Allocating Shares
The ESX has reportedly begun allocating shares, marking a crucial step in its operational setup. The NGX stands out as the leading institutional investor committing capital to support the securities exchange market.
Other key investors include Financial Sector Deepening Africa (FSD Africa), a UK-backed non-profit institution focusing on sub-Saharan Africa, and Trade and Development Bank Group (TDB), the financial arm of the Common Market for Eastern and Southern Africa (COMESA) trade block.
The Exchange Completed Its Capital Raise with Contributions from Local Investors
In addition to these major investors, the exchange successfully completed its capital raise with contributions from local investors. These included 16 commercial banks, 12 insurance companies, and 17 private entities.
Kassahun said, “Strategic foreign investments by TDB, FSD Africa, and NGX Group are significant in allowing the transfer of technical know-how and best practices, as well as other areas of long-term strategic value that we will explore.”
Africa’s Largest Securities Exchanges
The NGX, one of Africa’s largest securities exchanges, with a market capitalization of ₦58.66 trillion ($41.8 billion), is providing technical support to the ESX. This includes sharing expertise in developing exchange infrastructure, trading regulations, and marketing strategies.
The ESX’s Collaboration with the NGX
By collaborating with the NGX, the ESX has already established a framework of regulations to govern its operations. This initiative aligns with Prime Minister Ahmed’s goal of attracting more foreign investment to Ethiopia and accelerating post-conflict reconstruction efforts.
Establishing a securities exchange not only diversifies the nation’s sources of funding but also reduces reliance on traditional borrowing from international lenders.
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