Latest news with #EthiopianSecuritiesExchange
Zawya
a day ago
- Business
- Zawya
Healthy growth of listings on major African bourses
The Ethiopian Securities Ex- change (ESX) has seen more than birr 377bn ($2.6bn) worth of money market transactions in five months since it started providing a trading platform for interbank short-term lend- ing last October. At the time of going to press, trading in equities and bonds had not yet started on the ESX. The National Bank of Ethiopia (NBE) runs the interbank overnight and the 7-day lending market on the ESX's Capizar automated trad- ing platform, and Ethiopia's commercial banks are keen market participants. Prime Minister Abiy Ahmed launched the ESX in January. At the same time, Wegagen Bank listed by introduction, providing the first listed se- curities. Other listing applica- tions are in the pipeline. The ESX and the NBE signed an MoU in March for further cooperation, exchange of in-formation and disclosure. Mamo Mihretu, governor of the NBE, said: 'The interbank money market is a critical component in modernising Ethiopia's financial markets, ensuring greater market ef- ficiency, and strengthening monetary policy transmis- sion.' In April, the ESX then signed an MoU with develop- ment agencies FSD Africa and FSD Ethiopia, both funded by the UK government, which outlines a five-year collabo- ration with the aim of listing over 50 companies, creating platforms for active trading in government and corporate bonds, and enabling the in- troduction of Islamic sukuk securities and other innovative products. Also in March, the Ethio- pian Capital Market Authority (ECMA) licensed the first trad- ers for the ESX. In addition, the regulator licensed two investment advi- sors, further to the four previ- ously licensed. The new licensees are: • CBE Capital S.C. - invest-ment bank (CBE is a sub- sidiary of the state-owned Commercial Bank of Ethi- opia which dominates the financial sector) • Wegagen Capital Invest- ment Bank S.C. – invest- ment bank • Ethio-Fidelity Securities S.C. – securities dealer • HST Investment Advisory Services Plc – securities in- vestment advisor • Equation Securities Invest- ment Advisor Plc – securi- ties investment advisor. The next step for the in- vestment banks and securities dealer involves applying for ESX membership. This is being done in parallel to the ECMA licence applications. Training steps up By end March, the ESX was training the trading and oth- er teams as the prospective dealers and brokers. Accord- ing to the ESX, this involved trading rules, risk manage- ment, compliance and auto- mated systems, and providing valuable insights into how the ESX will operate. Practical sessions on the ESX Automated Trading Sys- tem (ATS), broker back-office systems, and the Central Se- curities Depository (CSD) gave hands-on experience to ensure 'a smooth transition into the market.' NCBA Group in Kenya also sent a team to train market participants in investment banking and custodian op- erations, in a five-day in- tensive programme provided by FSD Ethiopia, designed to equip financial professionals with practical skills in invest- ment banking, valuation, as- set management, brokerage, custody and trustee services. n (Tom Minney was also proud to lead a team for Cowater Inter- national Germany, funded by the European Union, which also trained ESX staff during March - Editor.) EGYPT'S EFG HERMES SUBSIDIARY SET FOR $300M LISTING Finance giant EFG Hermes is preparing to list its subsidi- ary, a financial technology specialist called U Consumer Finance S.A.E. (branded ValU) on the Egyptian Exchange (EGX). The application and regulatory processes were in progress as we went to press, and no date was set. Advisor BDO Keys Financial Consult- ing has set the value of ValU as E£15.6bn ($306m). ValU has provided financ- ing for 7.8m transactions, particularly buy-now, pay- later for up to 60 months, across 8,500 stores and online shops, including home appli- ances, electronics, furniture, residential solar, healthcare, education, travel and fashion. It has a 24% share in Egypt's consumer finance market and offers investments, savings and financing for expensive items up to E£60m, various credit and prepaid cards, and B2B solutions. After the listing EFG Hermes will still hold just under 20.5% of the shares directly and at least 67% in- directly, according to reports. EFG Hermes will distribute shares in ValU to its share- holders instead of cash divi- dends as part of its distribut-able profits for the 2024 fiscal year. EFG Holding has a 40-year history and operates in sev- en countries. It includes an investment bank called EFG Hermes, a group of non-bank financial institutions called EFG Finance, and a commer- cial bank, NXT. EFG Finance is still grow- ing and includes Tanmeyah (microfinance), EFG Corp-So- lutions (leasing and factor- ing), ValU, Bedaya (mortgage finance), Kaf (insurance), Fatura (a technology-backed business marketplace) and EFG Finance SMEs (financial services for small and me- dium enterprises). Government pledges 10 new listings The planned listing adds to the 10 companies that the Egyptian government is planning to list during 2025, according to Prime Minister Mostafa Madbouly. In March, EFG Hermes was reported to be working on two listings. The 10 planned listings are: • Banks - shares will be offered in Alexbank and Banque du Caire • State-owned enterprises – PM Madbouly pledged to offer shares in projects such as the Gabal El-Zeit wind farm, Alamal Alsharif Plastics, Misr Pharma and Chemical Industries Development Company (CID) • Companies affiliated to the Armed Forces - Wataniya, National Company for Pro- ducing and Bottling Water (Safi), SILO Foods, and Chill Out. He added that the govern- ment is developing, restruc- turing and improving govern- ance at 28 of the 59 entities that it oversees. Some will be prepared for public share offers and listing for trading on the EGX, others are being readied for equity sales to strategic in- vestors, some may be merged or liquidated and closed down, and others converted to public entities with improved gov- ernance. NIGERIA'S BOURSE PROFITS SOAR Profits for the Nigerian Ex- change Group (NGX Group) before tax, soared to N13.6bn ($8.5m), up 157% compared to the previous year. Gross earn- ings more than doubled for the year to 31 December 2024, to N24.0bn, up from N11.8bn in the previous year. There was strong growth across the exchange's key revenues and the group man- aged its costs, streamlining its workforce and pushing for efficient operations. NGX Group has declared a dividend of N4.4bn ($2.8m), or N2 per share. By mid-April the shares were trading at N33.05 each, up 38% in price over a year. Key revenue increases: • Transaction fees rose 64% as trading volumes in- creased • More listings meant that fees from initial and annual listings were up by 397%. The NGX Invest platform for paperless investment and capital raising has facilitat- ed N1.8trn ($1.1bn) in capital raises for the banking sec- tor, enhancing liquidity and investor participation • The group offers technology services, and tech-related income also doubled, up by 105% • Market data revenue grew by 101%, contributing to a 103% rise in other income, which now accounts for 30% of gross earnings • Treasury investment in- come climbed 45.6%, high- lighting NGX Group's effec- tive asset management. Alhaji Dr Umaru Kwairanga, Group Chairman of the NGX Group, said the results were 'a pivotal moment' in the growth of the group, since it stopped being an exchange owned by its members and be- came a company which listed its shares for trading. He said the exchange would continue to invest in market infrastruc- ture and innovation: 'The NGX Group under my leadership is focused on harnessing the entrepreneurial and innova- tive spirit of Nigeria's private sector to drive the economy to greater heights.' Temi Popoola, CEO of the NGX Group (below right), told shareholders at the annual general meeting in April that the exchange plans to deepen the market by creating oppor-tunities for private an facilitate private companies to raise capital, in addition to the current market for listed or public securities. He said this aligns with global trends, especially in the technology sector, where private equity and venture capital are pre ferred sources of fi nancing for businesses. He said: 'There is a global increase in the de- mand for private capital, and Nigeria is not ex- empted. All our unicorns, about six of them, are powered by private capi-tal. These companies are rais- ing significant funds without tapping into the public mar- kets, and that's the direction the world is going in.' He added that the bourse would be more proactive af- ter recent de-listings, when securities are removed from trading: 'We might position ourselves to provide private capital access, so that NGX is not just seen as a platform for public equity but as a gateway for all forms of capital. This is how exchanges across the world are adapting, some are seeing de-listings, but they are also landing large listings or tapping into private deals that keep market value intact.' Popoola explained that the NGX is working closely with the Securities and Exchange Commission (SEC) Nigeria to explore institutional reforms to make the market more at- tractive. He added that people are seeking to invest not only in private companies, but also offering private funds for listed companies, which may encourage them to del- ist. However, these growing capital flows could be an op- portunity for the NGX. The NGX is working with major Nigerian firms, includ- ing the Nigerian National Pe- troleum Company (NNPC), to encourage future listings and other opportunities. The exchange has made a strategic equity investment in the recently launched Ethio- pian Securities Exchange (ESX) and supplies training and sup- port. Popoola said: 'The 157.3% increase in profit before tax underscores the strength of our execution strategy and the dedication of our team. By leveraging technology, expanding market data solu- tions, and strengthening our partnerships, we have built a more resilient and diversified business model.' When will the NNPC list? The Nigerian National Petrole- um Company (NNPC) is keep- ing investors guessing on the timing of its eventual initial public offffering (IPO) and list- ing on the Nigerian Exchange (NGX). The listing has been on the cards since it was mandat- ed in the Petroleum Industry Act of 2021 and capital market regulations, but it has also al- ready been put onto the back burner several times. Olugbenga Oluwaniyi, NGX Chief Finance and Investor Relations Offifficer, said on 27 March that the company was in the 'fifinal stage', working with investor relations execu- tives and investment banks in preparation. However, the announcement was then withdrawn and shortly af-terwards a new Group CEO and other top management were announced. The aim of the listing would be for the state-owned NNPC to become a commercial entity and raise funds in the market instead of relying on govern- ment. Preparations for the IPO include improved corporate governance and transparency, to attract domestic and inter- national investors to Nigeria's oil and gas industry. According to the NNPC's latest annual results (to 31 De- cember 2023), net profit was N3.3trn ($2.1bn), up 28% from N2.5trn in 2022. The share- holders approved a dividend of N2.1trn ($1.3bn). Total revenue for the group was N24.0bn, up from N8.8bn in 2022. This continued the turna- round from 43 years of loss- es. The company lost N803bn in 2018, reduced the loss to N1.7bn in 2019 and then went into profit, achieving N287bn profit in 2020, ris- ing to N674.1bn in 2021. The company was changed from a corporation into a limited liability company in 2022. The new Group CEO, an- nounced in early April, is Ba- shir Bayo Ojulari, Rowland Ewubare is Group COO and Adedapo Segun is CFO. ANGOLA'S BODIVA EXPECTS TO MORE THAN DOUBLE LISTINGS Angola's Bolsa de Dívida e Va lores de Angola stock exchange (Bodiva), expects to increase the number of listed companies from four to 10 by 2027. Major state-owned enterprises, including diamond company Endiama and oil giant Sonangol, and other large organisations seem keen for their shares to be traded on the exchange. Walter Pacheco, CEO of Bo diva (right), said that the listings could include Banco de Fomento Angola, the Angolan unit of South Africa's Stand- ard Bank Group, and Unitel, a telecommunications company. The government has men- tioned plans to divest some or all of the ownership of 200 state-owned firms and other enterprises. The government is trying to reduce the state's domina- tion of the economy, increase transparency, and attract foreign investment into the economy. Sonangol is An- gola's largest company and a key part of the economy. It has shareholdings in Banco Com- ercial Português SA and Galp Energia, an oil company. Sonangol is working to- wards an initial public offering (IPO) of up to 30% of its shares. The IPO has been delayed un- til the government stops pro- viding fuel subsidies, after it was initially planned for 2022. Pacheco hopes that the list- ing will be completed by 2027 and will attract major foreign investors to the Angolan mar- ket. Bodiva itself was the fourth listing in November 2024 after an IPO of 30% of its shares. The share offer was heavily oversubscribed, according to the bourse. Bodiva released its financial results for 2024 in early April. Turnover for the year was 5.1bn kwanzas ($5.5m), down 27% compared to 2023. Profit measured by EBITDA (earnings before interest, taxes, depre- ciation and amortisation) was down 49% and net income was 1.3bn kwanzas. The value traded was 6.1trn kwanza ($6.6bn) and there were over 10,000 transactions in the year. BIG INCREASE IN CAPITAL-RAISING IN SOUTH AFRICA South Africa's JSE stock ex- change saw a small 1% in- crease to R21.6bn ($1.1bn) in trading activity in 2024, measured as the value of eq- uities traded, reversing a year of 9.5% decline in value traded during 2023. Some 70% of the trading activity was from high fre- quency and other traders us- ing the JSE's colocation servic- es, where they can rent space to use computers on racks that are located very near to the JSE's trading systems. A total of R103bn ($5.4bn) of capital was raised in the equity market through eight initial public offerings (IPOs), up considerably from the R41bn raised with three IPOs in 2023. However, there were 12 delistings, down from 20 companies which removed their securities from trading lists in 2023. Valdene Reddy, Director of Capital Markets, said: 'South Africa's equity market ended the year as a top performer, outstripping the S&P 500 and many emerging market peers. 'Growth in new listings during the year and anticipated listings in 2025 have showcased increased interest in the JSE as a capital-raising and trading destination. 'We saw an increase in listings largely through corporate unbundling highlighting the exchange's proposition as a preferred platform for value unlocking and growth. We also saw a significant increase in additional capi- tal raised, high issuance in our sustainability segment and strong interest in listing structured products.' On the bond market there were 780 new listings (up from 742 in 2023), including 28 new bonds in the sustain- ability segment. The face value of the bonds listed was R5.0trn ($262bn) and the total face value of bonds traded was up 7% to R48trn compared to the previous year. The JSE also offers post- trade services and handled 363,000 transactions, up from 327,000 in 2023. Robust growth for JSE JSE Ltd, a listed company which operates the exchange, enjoyed a year of robust growth with an increase in net profit after tax of 10.4% to R918m for the year to 31 De- cember 2024. JSE shareholders enjoyed a return on equity of 20.2%, up from 19.4% in 2023, and a 30% increase in the JSE's share price. The JSE board declared an ordinary dividend of 828c a share for 2024, up from 784c in 2023. Total income at the JSE in- creased by 6.5% to R3.17bn, and the JSE managed to in- crease revenues from most other services, offsetting muted trading activity in the equity market. Leila Fourie, JSE Group CEO, said: 'We recorded rev- enue growth across most of our asset classes off the back of sustained positive market sentiment following the for- mation of the Government of National Unity (GNU). 'Our strategy to build a diversified and resilient ex- change group resulted in non- trading income increasing to R1.2bn and it now contributes 38% of operating income, up from 37% in 2023.'. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Zawya
6 days ago
- Business
- Zawya
Ethiopia: Can securities exchange breathe new life in parastatals?
Ethiopia has finally lost its status as the most populous country in the world not to have a stock exchange. After years of prepa- ration, the Ethiopian Securities Exchange (ESX) was finally launched on 10 January 2025, but this is only the begin- ning of the story as just a single company was listed. Initial public offerings (IPOs) in many state-owned companies are expected, but Ethiopian Investment Holdings (EIH) hopes to improve the commercial perfor- mance of less efficient ones before seeking to sell stakes in them. (See page 20.) Investment of $11m was needed to launch the bourse and by April 2024, the ESX announced that the issue had been oversubscribed, with $26.6m offered by domestic and foreign investors. State- owned EIH and its offshoots Ethio Telecom and Commercial Bank of Ethiopia now hold 25% equity, with the remaining 75% held by private sector investors, including 16 of the country's commercial banks, 12 insurance firms and three foreign inves- tors – FSD Africa, Trade and Development Bank and the Nigeria Exchange Group. It was originally hoped that the ESX would begin operating in October but the launch was eventually pushed back to January. Wegagen Bank was the only company to list at launch but ESX chief executive Tilahun Kassahun expects 90 compa- nies to join within 10 years. Previously privately-owned, Wegagen is a mid-sized bank but one that has grown strongly in recent years. In the fiscal year 2023-24, it recorded a 40% increase in revenue to 9.8bn birr ($75.9m). The country's original stock exchange was closed down during the 1974 revolu- tion but creating a new bourse was one of the main planks of the current govern- ment's economic reforms. Ethiopian Prime Minister Abiy Ahmed described the move as a 'major step toward modernising the country's financial sector'. Brokers and dealers are now able to apply for licences. The delay in launching the ESX may have been because the sale of a 10% stake in Ethio Telecom was scheduled to close on 3 January, which would have enabled it to join the exchange. The Ethio Telecom shares are being sold exclusively to Ethiopian citizens via the company's TeleBirr mobile money platform. However, the opening of the ESX came and went without any mention of the domestic telecoms giant, apparently because it had failed to secure sufficient interest in its 10% stake by that date, with the deadline extended until at least 14 February. In addition to the delayed listing, the government failed to attract a foreign investor for a 45% stake in Ethio Telecom last year, with potential suitors perhaps deterred because the deal would still have left the government with a controlling share. However, once the 10% IPO com- pletes, buying a 45% stake may seem more attractive to foreign operators because it would end the government's majority stake. Ethio Telecom is one of the coun- try's more profitable parastatals, record- ing a profit of 21.8bn birr ($184m) for the year to July 2024. In a statement, the ESX said that it would be 'a key component of Ethiopia's financial sector reform, aimed at foster- ing economic growth and development by enabling companies to raise capital and offering investment opportunities to the public'. The government hopes that the ESX will support privatisation plans and rebal- ance the economy more in favour of the private sector. Yet while Ethio Telecom is expected to join Wegagen Bank sooner or later, it must be joined by many more other companies before the new exchange is considered a success. Which companies will be listed? The big question is how many of the 27 state-owned companies that have been under the stewardship of EIH since De- cember 2021 will actually be listed. As the new EIH chief executive Brook Taye explains on page 20, his company is fo- cusing on reforming state-owned enter- prises in the short term to make more of them commercially viable. However, this is likely aimed at preparing many of them for listing, as the EIH has been tasked with attracting foreign investment. Officials have said that some companies will be wholly privatised, while minority stakes will be sold in others. Ethiopian Airlines is the jewel in the crown and would undoubtedly attract huge investor interest but it is already profitable and a national success story, so the government may decide to keep it entirely under state ownership. Even if it is partly privatised, the government will be keen to time the sale to secure the best price. Ethiopian Insurance Corporation, Ethi- opian Shipping and Logistics Services Enterprise and Berhanena Selam Printing were named as founding members of the exchange at its launch. Although they are not yet listed, they are expected to be among the first state-owned companies to seek a listing. Stakes could also be sold in loss-mak- ing companies in the power, transport and food sectors to help put them on a more commercial footing but they are likely to be of less interest to potential investors. The government sees many of them as providing a public service rather than solely as commercial enterprises, and may be reluctant to turn them over to the private sector. Their profitability is unknown but it seems likely that many are currently generating losses rather than profits, particularly while having to operate in subsidised sectors. Economic context The launch of the ESX has followed the pattern of general government economic policy since Prime Minister Abiy Ahmed came to power in 2018. There has been a gradual process of economic liberalisa- tion, including in the telecoms and finan- cial services sectors, with Kenya's Safa- ricom winning the country's first private telecoms licence in 2021. Yet the pace of change has been slow and subject to huge shocks, including the Covid-19 pandemic, the 2020-22 war in Tigray and armed conflict elsewhere in the country. These factors contributed towards a sovereign debt crisis that culminated in the suspension of debt repayments to China in August 2023 and then default on Ethiopia's $1bn Eurobond after it missed a $33m payment. However, Addis Ababa reached an agreement with the IMF to implement further economic reforms, including allowing the birr to float in July 2024, in return for $3.4bn of IMF financ- ing that allowed the country to begin re- structuring its debt. The four-year IMF programme will also require reforms in monetary policy, the management of state-owned en- terprises, tax structures and financial services' regulations. The sale of stakes in parastatals would further help Ad- dis Ababa strengthen its finances but it must time any IPOs carefully in order to secure the most revenue. Waiting until its economic position improves and putting more distance between the debt crisis and any sales could help increase valuations. Ethiopia's position as one of the world's fastest-growing economies, with average annual economic growth of almost 10% between 2004 and 2020, should make it an attractive investment destination. At the same time, its population of 130m is set to increase to 225m by 2050, providing a huge market for potential investors. Yet a change in corporate culture and regula- tory requirements would greatly help to attract investment and interest in the ESX, as some Ethiopian companies currently fail to offer the financial transparency common in other markets. It will be interesting to see how many other companies are listed over the course of this year but privatising state owned companies, even in part, is not a panacea for economic improvement. The govern- ment needs to instil more confidence in investors if it is to attract sufficient inter- est in Ethiopian companies. It is therefore understandable that the EIH is reluctant to sell off assets too quickly because a rushed process could undervalue them. Yet a stock exchange with a single component, or even just a handful of companies, will hardly be a ringing en- dorsement of Ethiopia's attractiveness as an investment destination. n The big question is which of the 27 state-owned companies under EIH's stewardship will be listed. EIH is likely preparing many for the process. © Copyright IC Publications 2022 Provided by SyndiGate Media Inc. (
Arabian Post
10-06-2025
- Business
- Arabian Post
Ethiopia Targets 8.9 % Growth as Budget Widens
Ethiopia's finance minister has announced that the economy is projected to expand by 8.9 % in the fiscal year beginning 8 July 2025, alongside a modest increase in the budget deficit amid structural reforms. Finance Minister Ahmed Shide addressed parliament on Tuesday, outlining the forecast for the next fiscal year, citing an acceleration in real GDP growth from an estimated 8.4 % this year to 8.9 % next year. The state budget deficit is expected to rise slightly to 2.2 % of GDP, compared to 2.1 % in the current year. Total government expenditure is projected at 1.9 trillion birr, equivalent to around US $14 billion. This positive outlook is deeply anchored in ongoing reforms backed by an International Monetary Fund programme. These include the liberalisation of the exchange rate, debt restructuring negotiations, and the establishment of the Ethiopian Securities Exchange, which opened in January after a 50‑year absence. ADVERTISEMENT The cabinet's approval of the new budget earlier this month signalled a strategic reallocation of resources, with spending set to increase by 31 % compared to the previous year's 971 billion birr. A significant portion is earmarked for national security, productivity enhancement, and disaster relief, including continued subsidies for fuel, fertiliser, oil and medicines—a move aimed at dampening inflationary pressure on households. Reforms and their impacts The IMF programme that began in July 2024 has been a linchpin in the reform agenda. In April, State Finance Minister Eyob Tekalign reported that the third review of the four‑year US $3.4 billion loan arrangement had reached staff‑level agreement, with approval by the IMF executive board anticipated this month. Subsequent draws will hinge on continued reform progress, notably debt restructuring. Debt, inflation and exchange rate liberalisation remain pressing concerns. A draft budget revealed that 463 billion birr—nearly 39 % of recurrent expenditure—will go towards debt servicing, surpassing planned capital outlays. The government intends to restructure approximately US $3.5 billion in external liabilities through agreements in upcoming weeks. Bondholder writedowns are expected as part of a broader debt resolution strategy. Monetary reforms have lessened inflation, which reached 29.2 % in 2022/23, and narrowed the spread between official and parallel exchange rates. Foreign reserves have rebounded, tripling to US $3.6 billion, easing foreign exchange shortages. These financial indicators have been central in IMF assessments. Policy makers are awaiting formal debt restructuring talks this summer with official and private creditors alike, guided by the G20 Common Framework. Iran‑timed agreements with Chinese policy banks, the U.S. International Development Finance Corporation and other funders are being explored to support infrastructure and development needs. Regional comparisons and strategic outlook Ethiopia remains one of sub‑Saharan Africa's highest growth economies, although still below the pre‑covid annual average of around 10 %. The country's trajectory continues to be shaped by recovery from the Tigray war, covid‑19 disruptions, droughts and locust invasions, but ongoing reforms are expected to unlock further expansion. The imminent fiscal year budget, combining a steep rise in expenditure with a stabilising deficit, underscores a cautious but ambitious strategy: focusing on debt management, reform momentum and public service delivery, rather than unfettered spending. Key stakeholders, including opposition figures such as Desalegn Chane of the National Movement of Amhara, have voiced concern over rising tax burdens amid steady living costs and a depreciating birr. Criticism has targeted new levies on motor vehicles and excise taxes, with claims these conflict with subsidy policies. The finance minister, however, defended these as necessary for fiscal resilience and revenue expansion. Broader reform dynamics have been influenced by Prime Minister Abiy Ahmed's economic agenda, including the launch of Ethiopia's first stock market since the Haile Selassie era, currency liberalisation, and opening the banking sector to foreign investment. These steps have been deemed essential to securing up to US $27 billion in external funding from IMF, World Bank, UAE, China and others over the next four years. Looking ahead The projection of roughly 8.9 % GDP growth signals confidence that reforms are gaining traction, even as the government prepares to finance a wider budget and service rising debt. The success of the IMF programme's next review, debt restructuring outcomes, and reform implementation will determine whether Ethiopia can sustain its economic momentum and weather domestic and global headwinds.
