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A Platform for the Privatization of Ethiopia’s State-owned Enterprises

At least 50 companies are expected to list on the Ethiopian Stock Exchange (ESX), set to launch in two years. The ESX is a joint project between the country’s giant new sovereign wealth fund, Ethiopia Investment Holdings (EIH), Ministry of Finance and Nairobi-based Financial Sector Deepening Africa (FSDA). Between 25% and 55% of the ownership of the ESX will be for corporations, capital market intermediaries and operators of international securities exchanges, while government will not own more than 25%. Meanwhile, the establishment of EIH, one of Africa’s biggest sovereign wealth funds, could be the start of a massive turnaround in Ethiopia’s long-established economic heterodoxy. It was set up in late 2021 and will control assets worth some $38bn, or 34% of Ethiopia’s GDP, generating annual revenues of $6.2bn. It has some of Ethiopia’s largest and most productive state-owned enterprises in its portfolio, such as Ethiopian Airlines, the Commercial Bank of Ethiopia or Ethio Telecom, and with its active participation in the establishment of the country’s first securities exchange, is likely to pave the way for the liberalization of the economy and increase the pace of privatization.