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Ethiopia’s decision to exclude foreign and diaspora investors from participating in the highly anticipated Ethio Telecom IPO could hinder the development of its capital markets, a key element of Prime Minister Abiy Ahmed’s financial sector liberalization efforts.
By restricting the offer to Ethiopian citizens physically present in the country, the government risks slowing the opening of Ethiopia’s economic space, which many had expected would attract significant foreign capital. According to Ethio Telecom’s prospectus, “The offer is being made only to Ethiopian citizens who are physically present in Ethiopia. The offer is not available to any other jurisdiction outside of Ethiopia.”
This move, which contrasts with earlier expectations of liberalization that would include international and diaspora participation, reflects the government’s cautious approach to allowing foreign involvement in critical sectors.
Ethio Telecom, which enjoyed a monopoly over Ethiopia’s telecom market for decades, faces increased competition since the entry of the Safaricom-led consortium in 2022. However, it remains the dominant player, boasting a market share of over 94.5% as of June 2024, attributing its success to high customer satisfaction and the availability of a wide range of services nationwide.
Despite the government’s openness to foreign investment in other sectors, it remains protective of the telecom industry, viewing it as strategically vital to national interests. This cautious stance contrasts with broader expectations that Ethiopia would fully embrace external capital as part of its economic reforms.
In addition to Ethio Telecom’s IPO, Ethiopian Investment Holdings (EIH) plans to list other major state-owned enterprises, such as the Ethiopian Shipping and Logistics Services and the Ethiopian Insurance Corporation. The Ethiopian Securities Exchange (ESX), which recently raised $26.6 million to support its launch, is expected to list over 10 companies by 2025.
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