• Ethiopia’s ESX is not hindered by slow IPOs but by the deeper challenge of building a market culture that matches its emerging-market institutions.
• Investors lack trust, not capital; credible, transparent early IPOs—not higher listing counts—will determine the ESX’s long-term success.
• Ethiopia is undergoing a structural shift toward transparency and market discipline; the ESX’s cultural transformation matters more than targets.

Ten months after Ethiopia launched its first stock exchange, the public debate has narrowed to a single convenient headline: “Three listings instead of nine.” But reducing the ESX story to a numbers game misses the more profound transformation taking place beneath the surface. The real challenge is not the slow pace of IPOs—it is the far bigger task of building a market economy before a market culture entirely exists. And that cultural shift, not the listing count, will ultimately determine the Ethiopian Securities Exchange's long-term success.

Every young capital market faces hesitation from companies, scepticism from investors, and a regulatory learning curve. Ethiopia’s situation is simply more pronounced. Decades of state dominance, informal networks, and a business tradition shaped by financial secrecy left most large companies—often family-owned and privately governed—deeply uncomfortable with opening their books to public scrutiny.

Yet listing on the ESX requires exactly that: audited financials, transparent governance, professional boards, consistent disclosure, and valuations determined by the market rather than internal negotiation. Ethiopia is asking its private sector to make in a few years a cultural leap that took other markets decades to accept. This, more than administrative delays, explains the thin IPO pipeline. Transparency cannot be fast-tracked.

The same cultural shift is needed on the investor side. Ethio Telecom’s IPO underperformance—raising only a fraction of its target—was less a verdict on the company and more a reflection of the ecosystem. Ethiopian investors are not short of capital; they are short of confidence.

After years of inflation pressure, banking-sector strains, liquidity issues, and the dominance of state-linked enterprises, a cautious investment culture has taken root. Equity investment has never been a mainstream savings tool in Ethiopia. Asking the public to embrace capital markets suddenly is ambitious, and only consistent, successful early IPOs will begin to thaw investor scepticism. Trust is earned, not legislated.

This is why the government’s early ambition—nine IPOs by 2025—was always more a political signal than an economic forecast. It was meant to reassure partners, attract foreign attention, and prompt local businesses to start preparing. But political timelines rarely align with economic readiness.

Capital markets do not grow in line with government announcements; they grow at the pace of governance maturity, accounting standards, investor education, and institutional depth. Ethiopia is trying to create an entire ecosystem in one leap: regulators still scaling up, investment banks just licensed, brokers and advisors emerging, and companies learning compliance from scratch. The ESX is building the house while welcoming the guests.

Yet beneath the headlines, something more important is happening: Ethiopia is developing its first actual deal-making class. Firms like CBE Capital and Wegagen Capital Investment Bank—along with other newly licensed capital-market service providers—are creating a professional industry that did not previously exist. Investment bankers, corporate finance specialists, and equity analysts are beginning to shape valuations, structure IPOs, guide governance reforms, and educate issuers and investors alike. In many emerging markets, the arrival of this professional infrastructure unlocked sustained capital-market growth. Ethiopia is now at that inflexion point.

The ESX’s IPO Clinic reinforces the same shift. It is not a token training program; it is a practical acknowledgement of Ethiopia’s starting point. Companies are learning to restructure governance, prepare compliant financial statements, separate ownership from management, and communicate with investors.

The fact that firms like IE Networks and Liyana Healthcare are emerging as candidates illustrates that a new type of company is taking shape—organisations willing to embrace global transparency standards. Ethiopia is industrialising capital-market literacy from ground zero, and that process necessarily takes time.

This is why missing the nine-IPO target may ultimately be a blessing. Ethiopia does not need a high number of listings in its first year; it needs credible, well-priced, professionally executed IPOs that deliver good post-listing performance. A rushed or poorly prepared listing would damage the ESX far more than a slower start would. If Ethiopia ends 2025 with just three to five strong IPOs—transparent, trusted, and liquid—it will already be ahead of where many African exchanges were in their early years. The fundamental success metric is not quantity but credibility.

Idriss Linge