Apart from that, Ermias Eshetu sees a lot of other benefits from stock exchange such as improvement in corporate governance on the account of being publicly owned would ultimately encourage managers to strive for better governance. An exchange would also help to expand the tax base of the country. On the other hand, all the experts agree that the impact of stock exchange on attracting quality FDI is also something that could not be downplayed.
As to Yared and Ermais, the Ethiopian authorities espouse unreasonable fear of regulating a stock exchange. “Granted the flashing indexes of the New York Stock Exchange (NYSE) and Nasdaq could play a deterrent role for authorities; however, what Ethiopia needs at this time is a rudimentary stock exchange which is quite easy to regulate,” Yared concludes.
While Ermias asserts that even in the Eastern Africa region Ethiopia is in the league of Eritrea and others with political problems in terms of lacking an organized stock exchange. “If we can regulate ECX, we can regulate stock exchange; it is not like we would start with derivatives and other complicated instruments,” he stresses.
As head of ECX, Ermias has pushed for some sort of stock exchange in Ethiopia. To that end, he also showed interest to host the stock market with the ECX market platform “being perfectly fit” to handle such transactions. The National Bank of Ethiopia (NBE) has always had some sort of a capital market in its pipeline.
Currently, the Bank has long overdue project to establish a secondary market for bond; and has not moved forward, thus far.