Ethiopia Inaugurates Stock Exchange, a Major Step in Economic Liberalization
Ethiopia has inaugurated its stock exchange today, a significant milestone in the economic liberalization initiated by Prime Minister Abiy Ahmed. Since coming to power in 2018, the Prime Minister has aimed to modernize an economy that is still largely state-controlled and closed to foreign investors. However, reforms have been slowed down by internal conflicts, including the devastating war in Tigray (2020-2022).
The country's last stock exchange was closed in 1974 after the fall of Emperor Haile Selassie and the nationalization of the economy by the Marxist regime of the Derg. The reopening of this financial market is expected to offer new opportunities to investors, particularly by facilitating long-term financing and dynamizing the bond and interbank markets.
In recent months, significant economic reforms have been adopted to attract foreign investors. The banking system was partially liberalized in December, allowing the entry of foreign actors, while in October, the state ceded 10% of the shares of the operator Ethio Telecom. In July, Ethiopia also relaxed its exchange rate system, allowing commercial banks to set exchange rates freely.
Despite impressive economic growth, sometimes exceeding 10% between 2004 and 2019, the country has seen its development slow down since 2020, due to the COVID-19 pandemic and the war in Ukraine. Between 2020 and 2023, growth has dropped to an average of 5.9%, while inflation has soared, reaching 30.2% in 2023, according to the World Bank.
