Assessing Regulatory Challenges for Intra-Africa Capital Market Trading: The Case of Ethiopia
No Thumbnail Available
Date
2025-05-01
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
This study assesses the legal and regulatory challenges that limit Ethiopia’s participation in
intra-Africa cross-border capital market trading, which is the fundamental element for regional
economic integration. Ethiopia has established key institutions to fully operationalize its capital
market, including the Ethiopian Capital Market Authority (ECMA), the Ethiopian Securities
Exchange (ESX), the Ethiopian Central Securities Depository, and other service providers. This
development is marked as a substantial achievement in designing and implementing an effective
capital market. Following the enactment of the Ethiopian Capital Market Proclamation No.
1248/2021, other enabling directives were legislated. However, these legal frameworks lack
sufficient specific provisions or other separate laws for regulating cross-border securities
trading that include foreign securities registration, listing requirements, and compliance
mechanisms. As learned from the experience of the best practices of Kenya, Nigeria, and
Morocco, which benefited from robust regulations, regional integrations, like the African
Exchanges Linkage Project (AELP), and the Pan-African Payment and Settlement System
(PAPSS), this study emphasizes the need for harmonized legal standards and international
cooperation. Additionally, it identifies the economic benefits of cross-border capital market
trading in the context of Ethiopia as an emerging market, such as improving market liquidity,
expanding investor base, reduction of reliance on domestic financing, while addressing risks like
fraud and money laundering. Finally, the paper recommends the enactment of laws that address
detailed issues for hosting and participating in cross-border capital market trading, joining
regional integrations, integrating with PAPSS, revising Ethiopia’s tax laws, and expanding
bilateral agreements to create a competitive and strong Ethiopian capital market
Description
Keywords
Intra-Africa Capital Market Trading, Cross-border Securities Trading, Ethiopian Capital Market, Regulatory Challenges, Legal Framework, Regional Economic Integration