The Ethiopian Capital Market Authority has finalized a long-awaited directive on Collective Investment Schemes, a move expected to open new investment channels for ordinary Ethiopians and deepen the country’s still-early capital market.
The directive, which has been submitted to the Ministry of Justice for final legal review and registration, will provide the regulatory basis for mutual funds, unit trusts, money market funds and real estate investment funds. Officials say it marks an important shift from the capital market’s foundation phase toward full operation.
For decades, access to higher-return investment opportunities such as real estate, corporate debt and large-scale projects was largely limited to wealthy individuals and major institutions. Under the new framework, licensed fund managers will be able to pool small contributions from many investors and channel that money into diversified assets.
“This directive is about being all-inclusive,” Hana Tehelku, director general of the authority, told Capital. “It allows a teacher, a farmer, or a small business owner to entrust their savings to a licensed professional manager.”
The authority says the new rules will make it possible for Ethiopians to invest collectively in assets that are usually out of reach for individuals, including government bonds, corporate debt securities, money market instruments and large real estate developments.
One of the key features of the directive is the inclusion of Real Estate Investment Funds, a structure similar to REITs used in other markets. Officials say this will allow investors to buy units in major property projects while giving developers access to broader pools of capital. They say the model could also offer investors a way to hedge against inflation through asset-backed exposure.
The directive is also expected to pave the way for money market funds, which invest in short-term, low-risk instruments and could offer savers a more flexible alternative to ordinary bank deposits.
According to the authority, the draft now under review by the Ministry of Justice is the final stage in the legislative process. The ministry is expected to check that the directive aligns with existing law and confirm that public consultations were properly conducted before registration.
“We have had extensive preliminary discussions with the Ministry of Justice,” Hana said, adding that the authority expects the approval process to move quickly because the two institutions worked closely during drafting.
Once approved, the authority will begin licensing collective investment scheme operators. It said several domestic and foreign institutions have already expressed interest in becoming licensed fund managers.
The finalization of the directive comes as the authority steps up enforcement against unregistered investment activity. It has recently launched investigations into entities accused of selling shares or investment units to the public without legal registration, and has taken administrative action including freezing bank accounts in some cases.
Officials say the new directive will help create a lawful and transparent route for investment while making it easier to identify fraudulent schemes operating outside the regulatory system.
The authority also said the Ethiopian capital market is drawing growing interest from foreign investors, with one large international institution reportedly close to entering the market after completing the required procedures with the Investment Commission and the authority.
In a further sign of Ethiopia’s growing regional engagement, the authority said the country will co-host the East African Regulators Roundtable in early June. It added that Ethiopia is currently an observer member in a regional association of regulatory bodies and has established working ties with regulators in Kenya, Uganda, Tanzania and Nigeria.
Officials say those relationships could eventually support cross-listings and allow Ethiopian firms to access regional markets, while also creating a path for foreign companies to list in Ethiopia.
