The Ethiopian Parliament tabled a draft bill to establish a capital market where securities such as shares, bonds and derivatives are bought and sold. Drafted by the National Bank of Ethiopia (NBE), the bill was approved by the Council of Ministers and is expected to create an avenue where investors meet fund seekers, thereby facilitating better returns for investors who provide cash for companies and businesses that exhibit viable returns. Aiming to protect investors, the bill will serve as a legal framework in establishing a capital market that will support the development of the national economy through mobilizing capital, promoting financial innovation and sharing investment risks.
According to experts, establishing a capital market bill will help Ethiopia regenerate the existing fragmented and uncoordinated share markets to a higher level of organization and enhance competition between financial institutions and break commercial banks' domination of the market. The bill will allow the establishment of a Capital Market Authority, an autonomous federal government regulatory body with its own juridical personality, with the objective of protecting investors and creating an enabling environment for long term investments.
The Authority, which will be accountable to the Prime Minister who will also appoint its Director-General, is responsible for ensuring the existence of the capital market ecosystem.
FDR Ethiopia Embassy (Source)
