Somalia and Ethiopia stock markets are set to link up with peers in the East African region, nearly 50 years since the idea of integrating regional bourses was mooted.
The Somali Stock Exchange (SSE) and the Ethiopian Securities Exchange (ESX), which went live on January 10, will officially integrate with the Kenya, Uganda, Tanzania and Rwanda bourses under the East African Securities Exchanges Association (Easa).
Ethiopia's Prime Minister Abiy Ahmed rings a bell during the launching ceremony of the Ethiopian Security Exchange (ESX) in Addis Ababa on January 10, 2025.
“We are excited about it as it brings us closer to a wider pool of companies and a wider pool of investors and one regional capital market block with a lot of potential,” Celestin Rwabukumba, Rwanda Stock Exchange CEO and chair of Easa told The EastAfrican on Thursday.
“For the EAC, it is a big plus to onboard the youngest but the biggest exchange if they play the cards right. They have got the numbers they can learn from experience of their predecessors especially learning from the challenges and mistakes that can help them leapfrog in their development.”
Ethiopia, Africa’s second-most populous nation after Nigeria, had a stock market for 14 years until 1974, when Emperor Haile Selassie was overthrown by the Derg junta, and share trading abolished.
The country has set up a stock exchange afresh to woo investors to help turn around an economy recently battered by local political problems, including a two-year conflict in Tigray region.
Prime Minister Abiy Ahmed’s administration has overseen a liberal stock market, among other policy shifts, to open up the economy to foreign investments after decades of tight State control. The country has been gradually opening its tightly controlled economy since Abiy came into office in 2018.
In December 2024, Ethiopia’s parliament passed a long-delayed piece of legislation to allow foreign banks operate in the country as part of the government’s efforts to attract more overseas investments.
“Ethiopia is a sleeping tiger that has been closed to so many economic operators in the region and beyond. They are slowly opening up, meaning more foreign investments and fresh capital for development,” Mr Rwabukumba said.
The ESX and SSE will join Nairobi Securities Exchange (NSE), Uganda Securities Exchange (USE), Dar es Salaam Stock Exchange (DSE) and the Rwanda Stock Exchange (RSE) in a plan seeking to enhance harmonisation of investments policies and creation of a unified regional stock exchange. Burundi still does not have an operational stock market.
The East African stock markets are working on a regional capital markets infrastructure to connect bourses electronically in a move meant to reduce the cost and time of trading in shares of companies listed across the borders.
The Somali Stock Exchange was founded by the Somali Economic Forum (SEF) to encourage foreign direct investment in the country’s growing economy as well as promoting private sector development.
The exchange, which currently has 10 listed companies, began selling its first shares on September 1, 2015 at its headquarters in Garowe.
According to Bloomberg, Ethiopia’s new exchange aims to list as many as 50 companies in the next five years.
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