Authority Doles Out Five Capital Market Service Provider Licenses

Wegagen, CBE nab first investment banking permits

The Ethiopian Capital Market Authority (ECMA) has approved licenses for five businesses to operate as capital market service providers (CMSPs).

CBE Capital SC and Wegagen Capital Investment Bank SC have acquired investment banking licenses, while HST Investment Advisory Services PLC and Equation Securities Investment Advisor PLC join the expanding Ethiopian financial sector as investment advisors, and Ethio-Fidelity Securities SC nabs the first securities dealer license.

The licenses were approved during a ceremony on Friday, marking a significant milestone in the journey towards the operationalization of the country’s first capital market—the Ethiopian Securities Exchange (ESX).

The new batch of licenses brings the total number of authorized capital market service providers to nine.

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The Authority continues to introduce new legislations and process license applications for several other service providers required to install a functional capital market ecosystem. The first four licenses were doled out to investment advisors, but the inclusion of investment banks and a securities dealer represents a transformative moment for the market.

The licensing of CBE Capital, Wegagen Capital Investment Bank is especially significant as both institutions are substantially owned by two major commercial banks—the state-owned Commercial Bank of Ethiopia (CBE) and Wegagen Bank, respectively.

A central bank directive introduced in July 2024 allows banks to acquire up to 100 percent equity shares in a capital market service provider, while limiting bank ownership in an insurance firm to not more than five percent of the firm’s subscribed capital.

Banks can also own up to 10 percent of a non-banking business other than insurance.

“The licensing of these five new capital market service providers is a clear sign that Ethiopia is on track to create a functional, diverse, and well-regulated capital market that will drive the country’s economic growth. The Ethiopian Capital Market Authority remains committed to providing the support and regulatory framework necessary for the continued success of the capital market and its participants.  The ECMA also reaffirms its commitment to building a market that can foster innovation, attract investments, and contribute to sustainable economic development. With the growth of licensed CMSPs and the continual enhancement of regulatory frameworks, Ethiopia is positioned to become an increasingly attractive destination for both local and international investors,” reads a statement from the Authority.