AfDB Grants $400,000 to Boost Ethiopia's Capital Market Development

The African Development Bank Group (AfDB) has approved a $400,000 grant to support the expansion and modernization of Ethiopia’s capital markets, marking a significant milestone in the country’s financial sector development. The funding, provided through the Capital Markets Development Trust Fund (CMDTF), will support both the Ethiopian Capital Market Authority (ECMA) and the Ethiopian Securities Exchange (ESX) under the new Ethiopia Capital Market Development Support Project.

This initiative aims to enhance infrastructure, diversify financial products, and strengthen the institutional capacity of Ethiopia’s budding capital market ecosystem. The support is expected to catalyze domestic and international investment, offering a major boost to Ethiopia’s economic transformation and long-term financing capabilities.

Strengthening Capital Market Infrastructure

Established in 2021 through the Capital Market Proclamation, the ECMA is the regulatory body overseeing the capital markets in Ethiopia. One of the key components of the grant will support ECMA’s efforts to build a public disclosure platform. This platform will allow companies to publish timely and accurate financial information for investors, shareholders, and stakeholders, thereby improving transparency, market integrity, and price discovery.

“This grant reflects our shared vision for a vibrant and resilient Ethiopian capital market,” said Hana Tehelku, Director General of ECMA. “The support for infrastructure development and capacity building will be instrumental in attracting both domestic and foreign capital.”

Diversifying Investment Instruments at the ESX

The Ethiopian Securities Exchange (ESX), which provides a trading platform for financial instruments, will use part of the funding to expand its product offerings beyond traditional equity instruments. New products under consideration include:

• Exchange-Traded Funds (ETFs)

• Sukuks (Islamic finance bonds)

• Green Bonds to finance environmental and sustainability projects

“The intervention is timely,” said Tilahun Kassahun, CEO of the ESX. “It’s time to focus on initiatives that deliver tangible impact for issuers and investors by diversifying services and creating new investment opportunities.”

A Strategic Milestone for CMDTF and AfDB

This grant marks the first CMDTF-funded project outside West Africa, signifying an important geographic expansion for the Trust Fund. It also reflects the AfDB’s vision of building resilient, well-regulated capital markets across the continent, tailored to mobilize long-term resources for public and private sector growth.

“This project aligns with our vision of enabling countries like Ethiopia to emerge as financial hubs capable of efficiently mobilizing capital,” said Ahmed Attout, AfDB Director for Financial Sector Development. “This is a milestone in CMDTF’s expansion and reinforces our commitment to building Africa’s capital markets.”

Broader Objectives: Financing for Development

The Ethiopia Capital Market Development Support Project is designed to improve access to long-term financing, thereby supporting both public infrastructure development and private sector growth. The project builds on prior AfDB-backed reforms, including:

• The 2021 Capital Market Proclamation

• Establishment of the ECMA

• Creation of the ESX

By laying the groundwork for a more vibrant capital market, Ethiopia is positioning itself to mobilize domestic savings, attract foreign investment, and enable broader participation in the formal financial system.

About CMDTF: Driving Capital Market Growth in Africa

Launched in 2019, the Capital Markets Development Trust Fund is a multi-donor initiative aimed at deepening and diversifying African capital markets. Donors include:

• Ministry for Foreign Trade and Development Cooperation of the Netherlands

• Ministry of Finance of Luxembourg

• Swedish International Development Cooperation Agency (SIDA)

The Fund initially focused on pilot projects in West Africa and currently operates in 16 countries with a total portfolio of $6 million. The Ethiopia initiative represents an important expansion of its mandate and underscores the growing importance of inclusive financial development across the continent.

As Ethiopia takes steps to modernize its financial architecture, this project is expected to drive job creation, boost private enterprise, and support the country’s broader development goals.