The Ethiopian Securities Exchange (ESX) has signed two pivotal technology agreements with Infotech Private Limited. The agreements cover the design, supply, and installation of an Electronic Trading Platform and a Broker Back Office and Order Management System.
InfoTech was established in 1995 and has an extensive profile across Africa, the Middle East and South Asia. It is modernizing stock exchanges and post-trade infrastructure in over 17 markets. The flagship platforms are Capizar® and Marlin®, both designed to address the evolving needs of exchanges, regulators and brokerage communities.
The InfoTech Electronic Trading Platform is designed to ensure market transparency, improve liquidity, and offer local and international investors a seamless and secure trading experience.
The Broker Back Office and Order Management System is to automate and streamline operations of brokerage firms, including onboarding of clients, order management, reporting and transaction processing. It also includes mobile application and web-based interfaces so investors can have real-time market watch and place orders directly. Brokers will be able to ensure direct market access to selected investors and operate with greater efficiency and accuracy.
Tilahun Esmael Kassahun, CEO of ESX, said in a press release: “This partnership with Infotech Private Limited represents a significant milestone in the realization of our vision to create a world-class securities exchange in Ethiopia.”
Muhammad Haris Naseer, COO of Infotech Private Limited, added: “Our commitment to delivering top-tier technology solutions aligns perfectly with ESX’s vision of a robust and vibrant capital market. Our teams are very excited on this partnership, and we hope to innovate together with ESX and bring more advanced products to market.”
The Ethiopian Securities Exchange (ESX) is Ethiopia’s first securities exchange and a key component of Ethiopia’s financial sector reform. The aim is to boost economic growth and development by enabling companies to raise capital and by offering investment opportunities.
The details of the tender and the Request for Proposal were reported here last December after the World Bank published three Invitations for Bids/ Requests for Proposals (RFPs) on 12 December. Lot 1 is the Electronic Trading Platform, Lot 2 is the Broker Back Office, and Lot 3 is a multi-asset Market Monitoring and Surveillance system for the Ethiopian Capital Market Authority (ECMA). The signing was finalized in July 2024 and announced on 13 August with a press release.
According to the original procurement notice: “The implementation period spans 16 months, with a modular deployment approach that ensures the core trading platform becomes operational within the first 5 months of the project’s commencement”.
The ESX is set to launch with at least two important listings within the next few months.
Capital market progress
As reported separately in May, the National Bank of Ethiopia has a head start and has been working for months on setting up the Central Securities Depository (CSD), which will hold all securities including government bonds and short-term bills and other securities. As announced in January, the CSD system is supplied by Montran, which works closely with the NBE and Ethiopia’s banks.
The CSD project is also supported by FSD Africa, which has supported the development of the ESX and other financial sector development in Ethiopia.
ECMA has also been licensing the capital market intermediaries, including stockbrokers, investment banks, fund managers and custodians who safeguard securities for institutional investors. Foreign firms, including from Kenya, are applying.
Background
Ethiopia is one of the largest African economies that does not have a securities exchange, although the previous State Bank of Ethiopia had organized share dealing in the 1960s which lasted until 1974.
In May 2022, the Ministry of Finance, EIH and FSD Africa had signed a cooperation agreement to set up the exchange. The ESX was incorporated in October 2023 as a collaborative effort between the Government of Ethiopia and the private sector. Our article in November 2022 gives background on laws passed and the potential size and scale of one of Africa’s most promising securities exchanges.
There potential is also outlined in a market size estimation study published by the Ethiopian Capital Market Authority (ECMA): “Potential Market Size Estimation and Projection for the Developing Ethiopian Capital Market,” prepared by economists Tewodros Mekonnen Gebrewolde (PhD) and Getachew Ahmed Abegaz. It can be downloaded from the full-screen version on this link.
The ESX and capital markets development is a central part of an economic transformation drive by the government, with support from the central bank and many stakeholders. The goal is to catalyse economic growth by providing a platform for companies to raise capital, promoting transparency and corporate governance, and to open new investment opportunities for savers.
Declaration of interest: The author has done consulting work involving ESX.
Photo supplied by InfoTech, Tilahun Esmael Kassahun, CEO of ESX, and Muhammad Haris Naseer, COO of Infotech Private Limited.
