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

The African Development Bank Group (AfDB) has signed a $400,000 grant agreement with the Ethiopian Capital Market Authority (ECMA) to strengthen the country’s emerging capital market, supporting the rollout of new financial products and the creation of a public disclosure platform for the Ethiopian Securities Exchange (ESX).

The funding will be channeled through the Capital Markets Development Trust Fund (CMDTF) under the Ethiopia Capital Market Development Support Project, a landmark initiative aimed at building market infrastructure, boosting transparency, and broadening investment opportunities.

Building on Earlier Reforms

The new project builds on AfDB’s earlier support, which included assistance in establishing Ethiopia’s capital market legal framework in 2021. That framework laid the groundwork for the launch of the ESX, which is expected to transform Ethiopia’s financial landscape by mobilising domestic and international investment.

With Ethiopia long reliant on bank financing and donor support, the development of a capital market is seen as essential for providing long-term financing options for both public and private sectors.

Key Features of the Support Project

The grant will fund two major components:

1. Public Disclosure Platform – This will allow companies listed on the ESX to share timely, accurate, and reliable information with investors, shareholders, and regulators. Such a system is critical for market transparency, investor confidence, and fair price discovery.

2. Product Development and Diversification – The ESX will introduce a wider range of instruments, including:

   • Exchange Traded Funds (ETFs) – low-cost, liquid investment vehicles that broaden investor access.

   • Green Bonds – financing tools to support climate-friendly and sustainable projects.

   • Sukuks – Islamic finance-compliant securities that can attract investment from new pools of capital.

Together, these products aim to deepen Ethiopia’s financial sector, expand financing channels, and attract international capital flows.

Voices from the Signing Ceremony

The agreement was signed in Addis Ababa by Ms Hana Tehelku, Director General of ECMA, who emphasised the project’s transformative potential:

“We are proud to collaborate with the African Development Bank’s Capital Markets Development Trust Fund on this vital project. The support for ECMA’s infrastructure development and ESX’s capacity building and product diversification will be instrumental in attracting domestic and international investment, propelling Ethiopia's economic growth, and expanding access to crucial long-term financing.”

Representing AfDB, Mrs. Akane Zoukpo Sanankoua, Manager for Capital Markets Development, said the initiative was part of a broader mission:

“The Ethiopia Capital Market Development Support Project’s broad objective is to contribute to the expansion of Ethiopia’s financial sector and economy by improving access to long-term financing for the public and private sector through capital markets. It reinforces the Bank’s commitment to building resilient capital markets that can mobilize domestic and international long-term resources while unlocking new financial opportunities.”

Mr. Sebastian Beyenburg, First Secretary at the Embassy of Luxembourg, also attended the signing, representing CMDTF donors.

About the CMDTF

Established in 2019 and managed by the AfDB, the Capital Markets Development Trust Fund (CMDTF) is a multi-donor facility that provides targeted support to deepen and diversify capital markets across Africa. Its contributors include the Ministry for Foreign Trade and Development Cooperation of the Netherlands, the Ministry of Finance of Luxembourg, and the Swedish International Development Cooperation Agency (Sida).

As of September 2025, CMDTF has an active portfolio of $6 million supporting projects in 16 African countries. The Ethiopia Capital Market Development Support Project is notably the first CMDTF-funded initiative outside West Africa, signalling a geographic expansion of its interventions.

A New Era for Ethiopia’s Capital Market

The launch of the ESX and associated reforms are expected to unlock Ethiopia’s financial potential, offering opportunities for investors while supporting government development goals. By introducing innovative financial products and modern disclosure practices, Ethiopia seeks to build a vibrant, resilient, and inclusive capital market that can drive economic transformation in the years ahead.