Market registration be achieved without an extension?
The Ethiopian capital market is on the cusp of a major milestone. By November 13, 2025, all share companies in Ethiopia—except those with fewer than 50 shareholders and under 100 million birrs capital—are required to register with the Ethiopian Capital Market Authority (ECMA). This deadline, set by Directive 1030/2024, was envisioned as a necessary step to make the capital market fully operational within one year of the directive’s issuance.
While the intention is commendable, the reality on the ground raises serious questions about whether this timeline is practical—or even possible—without risking the credibility of the registration process and hence the integrity of this emerging market itself.
The Capacity Challenge
As of today, ECMA has licensed only five securities transaction advisors and two investment banks to facilitate the registration process. According to the proclamation, share companies cannot self-register but must engage these licensed advisors to prepare registration statements and prospectuses.
The challenge is that most of these advisory firms are new, having received their licenses only in late 2024 or early 2025. They are still in the early stages of building internal capacity, recruiting staff, and establishing expertise. Preparing a registration statement and prospectus is a complex exercise requiring not only financial acumen but also valuation skills, legal analysis, and an understanding of global disclosure standards.
Even established advisory firms in mature markets take time to build capacity before handling dozens of clients simultaneously. In Ethiopia’s case, the situation is more pressing: hundreds of companies will soon rush to meet the November 2025 deadline, overwhelming these newly licensed firms. To manage the process and mitigate the burden, some advisors are already attempting to hire professionals from abroad, since the pool of local experts is thin. While this may temporarily fill the gap, it comes with cost implications that are ultimately passed on to companies, making compliance more expensive. If, however, the process is implemented in a phased manner, it would not only ease the immediate pressure but also allow local capacities to be gradually developed over time, reducing long-term dependence on foreign expertise.
Risk of Rushed Implementation
Even though the requirement for securities registration is envisioned since November 13, 2024, majorities of the companies are starting the process very lately as licensing of the advisors is also done lately. The danger of pushing through such a large-scale registration exercise without adequate preparation is that quality may be compromised. If prospectuses and valuations are prepared hastily or without sufficient expertise, it could undermine investor confidence before the market even takes root.
Capital markets are highly sensitive. They thrive only when transparency, trust, and confidence are consistently demonstrated. Ethiopia cannot afford to start its market with weak disclosures or poorly prepared company registrations, as this would set an undesirable precedence.
We have already seen a warning sign. The recent Ethio Telecom IPO— which was the first in our recent capital market journey—was met with underwhelming demand, securing less than 13% subscription of the 10% floated axions of this 130-years flagship company. Many observers attribute this outcome to rushed preparation, lack of transparency, and weak communication with the public. Repeating such missteps in the wider registration process would be far costlier.
Why a Gradual, Phased Approach is Critical
Ethiopia’s capital market should be established step by step, with a focus on long-term credibility rather than short-term deadlines. Rushing risks undermining the very goals this reform is supposed to achieve: financial inclusion, innovation, and support for economic growth in a market that should be founded on integrity, trust and investor’s confidence.
A phased implementation, as is done in the adoption of International Financial Reporting Standards (IFRS), would allow companies to comply in stages, while giving regulators and advisors time to strengthen capacity. The market will only succeed if its foundations—disclosure standards, professional expertise, and regulatory credibility—are carefully laid.
Strategic Recommendations
To avoid a rushed and potentially damaging start, the following strategies should be considered:
1. Build Advisory Capacity First
ECMA and other pertinent stakeholders should first work towards strengthening securities advisors, legal professionals, and auditors. Without their technical strength, quality registration cannot be ensured.
2. Strengthen the Regulator’s Internal Capacity
ECMA itself is a newly organized body. Receiving, reviewing, and scrutinizing hundreds of registration statements and prospectuses in a short period will be overwhelming. The Authority needs time to establish strong internal systems, recruit skilled staff, and set up processes for quality review. A phased workload would help the regulator build its institutional capacity without compromising standards.
3. Assess Company Readiness
Share companies should be supported in evaluating their readiness for registration. Many may need guidance on governance, financial reporting, and disclosure standards before filing.
4. Adopt a Phased Timeline
Instead of one rigid deadline, companies should be classified into large, medium, and small, with staggered registration schedules. This approach—if managed effectively can balances urgency with practicality.
5. Create a Support Task Force
A dedicated, multi-stakeholder task force should be established to provide technical support, troubleshoot bottlenecks, and ensure companies receive timely guidance.
6. Learn from Global Best Practices
Ethiopia should adapt lessons from other emerging markets that successfully launched capital markets by prioritizing transparency, phased implementation, and investor education.
In summary, the Ethiopian capital market represents a bold step toward modernizing the financial system, expanding investment opportunities, and supporting inclusive economic growth. However, its success hinges on careful planning and realistic implementation.
A one-size-fits-all deadline risks undermining trust at the very start. By adopting a phased, capacity-driven approach, ECMA can ensure that Ethiopia’s capital market begins on a strong, credible foundation—earning the confidence of both domestic and international investors.
Tamrat Mengesha is a finance and investment professional holding the Chartered MCSI designation from the Chartered Institute for Securities & Investment, as well as ACCA and CMA qualifications.
