A host of companies in manufacturing, food and agriculture, services, education, construction and the like dipped into the share market and raised capital. This is what the experts call a primary market for shares or stocks.
According to economics literature, the whole financial market architecture is understood to incorporate the money market and the capital market. The capital market in turn is made up of financial instruments like stocks and bonds (securities) and other non-securities instruments such as bank deposits, mutual funds, and the like. As far as securities are concerned, there are primary and secondary markets signifying transactions between the original issuer/owner of bond or stock (share) and the buyer (primary market); and transactions between holders of bond and share certificates on secondary level (secondary market).
In Ethiopia’s case, there is considerable level of share transaction concluded in the past two decades with companies floating stocks (shares) to buyers in the format of primary capital market. According to Yared, the total estimated shares floated to buyers to date amounts to a staggering 80 billion birr and 4.72 percent of the GDP.
“The financial sector share alone goes up to 28 billion birr,” Yared told The Reporter. But, what is missing in this picture is a secondary market platform like an organized stock exchange. For Ermias, the authorities’ decision to allow primary share markets to thrive and bar the establishment of secondary markets (stock exchanges) is a real enigma. “It becomes weird when one sees how unregulated (rather neglected) the primary market really is; at least secondary markets comes with their own inbuilt standards and investor safeguards,” he argues.