Kenya says it has opened its doors to Ethiopian companies to trade on the Nairobi Securities Exchange (NSE), as a way of encouraging the East African country to ease its protectionist economic policies.
Although Addis Ababa has started embracing privatisation, holding only sectors regarded as strategic, i.e. Telecommunications, the non-availability of a stock market in Ethiopia has shut out foreign investments.
“I can disclose that Kenya stands ready to begin consultations for the regulations and guidelines that would allow Ethiopian companies to raise investment capital and trade at our Nairobi Securities Exchange,” Kenya’s president, Uhuru Kenyatta said at a business forum in Addis Ababa.
The NSE, which currently plays a key role in the East African business landscape in 2012 offered to help Somalia start a stock exchange, a plan that never materialised. It has helped other neighbours however, including Uganda, by dual-listing shares of companies already listed in the country, according to a report by Reuters.
Ethiopia’s economy is one of the fastest growing in Africa, but analysts believe the country would do much better than its 9.7 percent growth in the fiscal year 2012/2013 if it privatises state-owned sectors.
With a population of over 90 million, Africa’s second highest, many investors see an opportunity they can exploit in Ethiopia, but have lamented the lack of a stock market.
As investors wait on Addis Ababa to open up the economy, Mr Kenyatta expressed hope Ethiopia would open up its markets to Kenyan businesses in reciprocation of the treatment Ethiopian businesses receive in Nairobi.
“We are enthused by the possibilities for joint ventures between our business, and particularly by the potential for cross-listing on regional bourses,” Kenyatta said.
If Ethiopia agrees to allow its companies trade on the NSE, it would not only encourage regional integration in the region, but provide investors the investment opportunity they crave. The Nairobi bourse will also become bigger for it, as the country’s over 90 million population and current infrastructural projects would aid continous foreign investment.
