After decades of a closed financial system, Ethiopia is stepping into a new economic era. The launch of the Ethiopian Securities Exchange (ESX) is more than a symbol of modernization — it raises real questions about access, trust, and who this new system will ultimately serve.
Can Digital Access and Financial Literacy Keep Up with Ethiopia’s Economic Shift?
Ethiopia recently launched its first-ever stock exchange — the Ethiopian Securities Exchange (ESX). This move marked a historic shift from decades of a closed economy, allowing private investment. The launch represents a bold step toward financial liberalization under Prime Minister Abiy Ahmed’s reform agenda.
Ethiopia was among the few African countries with a stock market in the 1960s until 1974, when the six companies that were trading collapsed as the government nationalized all major businesses and institutions. While the institutional groundwork is being laid, the real test lies ahead: will ordinary Ethiopians — retail investors — embrace this new financial ecosystem?
What’s the Legal and Institutional Setup Behind ESX?
ESX established the Capital Market Authority (CMA) to regulate and oversee all capital market activities. Legal frameworks have been introduced to support securities trading, investor protection, and corporate governance.
International consultants and regional partners have played a key role in designing the ESX. Locally, the private sector has partnered with public institutions, with Ethiopian Investment Holdings emerging as a major shareholder.
Initial listings are expected to include partially privatized state-owned enterprises like Ethiopian Airlines and Ethio Telecom. Foreign investors involved include the Nigerian Exchange Group (NGX), FSD Africa, and others.
Are Ethiopians Ready to Invest in the Stock Market?
For a stock market to thrive, it needs broad-based participation, not just from institutions but from individual investors. Most citizens of Ethiopia have limited exposure to formal investment vehicles beyond land, gold, and livestock.
There is growing interest in how ordinary Ethiopians can be brought into the capital markets. This matters because, without meaningful participation from the broader public, the benefits of Ethiopia’s stock market could remain concentrated among elites and institutional players. Ensuring access and appeal for everyday citizens — farmers, small business owners, and urban youth — will be essential for turning this financial reform into a truly inclusive economic shift.
Why Financial Literacy Is a Barrier for Retail Investors
Financial literacy remains a major obstacle. Many Ethiopians lack basic knowledge about stocks, bonds, dividends, and risk diversification, making them hesitant to invest in the ESX.
Low financial literacy limits the use of formal financial products like savings accounts, insurance, or investment instruments. This reduces the pool of potential investors and undermines market liquidity.
The gaps are wider among women, rural residents, and less-educated groups, reinforcing economic disparities. Public education campaigns — especially for youth and marginalized communities — will be critical in building a knowledgeable investor base.
How Infrastructure Gaps Limit Market Access
Though digital infrastructure is improving, it remains underdeveloped outside Addis Ababa. As of early 2025, Ethiopia had about 28.6 million internet users, representing a 21.3% penetration rate — meaning nearly 79% of the population remains offline.
Access to brokerage accounts and trading platforms is limited. Mobile banking, a key tool for stock market participation, was only recently introduced, and public familiarity with it is still low.
Cultural Preferences and Distrust in Formal Finance
Traditional savings habits favor tangible assets like land, gold, or real estate. Financial instruments are often viewed as risky. Years of economic centralization and political instability have fueled distrust in formal financial systems.
However, younger Ethiopians and those in the diaspora are more open to new investment ideas. Building trust will require education, transparency, and strong regulation.
Inflation, Poverty, and Economic Instability
High inflation erodes the real value of returns, making equities less attractive, especially for risk-averse investors. Rising input costs hurt corporate profitability and dividends, while exchange rate depreciation deters foreign investment.
Poverty also limits the number of small-scale investors. Stabilizing the currency and enforcing transparent governance will be essential to attract and retain participation.
How Is Ethiopia Trying to Attract Individual Investors?
Government and private sector initiatives are promoting financial inclusion and investor education. Fintech startups are launching mobile-first platforms to simplify access.
One example is TeleBirr, which enables users to purchase shares and receive dividends via mobile wallets. The ESX is also deploying Marlin ESX, a trading system designed for mobile use, offering real-time data, simulated trading, and intuitive interfaces.
Brokers and financial institutions are partnering with cooperatives and banks to expand reach. Awareness campaigns — using local languages and media — are essential given Ethiopia’s linguistic diversity.
What Can Ethiopia Learn from Kenya, Nigeria, and Rwanda?
Kenya, Nigeria, and Rwanda are well ahead in retail investor inclusion, using micro-investing apps and grassroots education. Ethiopia can draw on these examples to build accessible platforms and launch effective campaigns.
In Kenya, for example, platforms like M-Akiba allowed citizens to invest in government bonds via mobile phones, according to the Central Bank of Kenya and coverage by Business Daily Africa with as little as 3,000 Kenyan shillings (around $20), making participation far more inclusive. Nigeria has also embraced fintech solutions that simplify stock trading for first-time investors, especially among the youth.
Ethiopia has the potential to follow a similar path by adapting these tools to its unique context — leveraging mobile penetration where available, developing local-language user interfaces, and embedding financial education directly into investment platforms. These lessons can help bridge both the digital and knowledge divide.
Will Ethiopia’s Stock Market Be Inclusive?
The ESX aims to build an inclusive capital market with diverse participants, innovative products, and strong governance. Sustained policy support, improved digital infrastructure, and expanded financial education will be crucial.
Wider retail participation could help distribute wealth more equitably and stabilize the market. When more individuals are able to invest, particularly those from underserved communities, it democratizes wealth-building opportunities and reduces reliance on informal savings methods.
Moreover, a diverse investor base can strengthen market resilience. Broad participation tends to cushion against volatility, as retail investors are often less reactive to short-term market fluctuations than institutional traders. This can help establish a more stable and mature financial ecosystem in the long term.
Conclusion: Can a New Stock Market Drive Inclusive Growth in Ethiopia?
Ethiopia’s move toward a modern capital market is strategic and ambitious. Success will depend on whether everyday citizens — not just elites or foreign investors — are brought into the fold.
If executed well, ESX could become a powerful engine for inclusive growth in one of Africa’s fastest-growing economies.
main photo: By Abshewaga - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=126083596
