Page 16 - Abyssinia Business Network ABN August 2019

Ethiopian Stock formed in addition to inappropriate
actions of company organizers.
Facilitation of the trade and the
Exchange Market: positive impact of stock exchange
markets, a question could be raised
whether or not establishing a stock
exchange market could do away with
Challenges the problems that have occurred and
likely to occur in the future.

and While this is the truth, establishment
of stock exchange and its related
Prospects issues are seems to be undermined
by the government and stakeholders
in our country. Therefore this article
focus particularly on challenges
and prospects of establishing stock
By Samuel Tekleyesus exchange in Ethiopia and it tried to

( The writer earns MBA in see the role of stock exchange in the
Finance, is a Lecturer, Researcher long run economic growth, its role
and Business Consultant ) as an alternate source of finance and
the current challenges and prospects
for establishment of stock exchange.
thiopia is the only country of Introducing stock market, among It is important as it could provide
the world’s 15 most populous other things, allows the “de- us with a better understanding
Ecountries which does not have concentration of ownership, of the Stock exchange markets
a stock exchange. As different Scholars improve accounting and auditing in providing alternative financial
agreed, stock can benefit the economy standards, provide effective tools source, particularly for the Ethiopian
of a developing nation in a number of for monetary and fiscal policy context, as the dynamics of the
ways, particularly when prices fairly and help privatization efforts” business environment is changing
and accurately reflect supply and and also contributes to economic rapidly.
demand. growth, since it encourages
investment by helping traders Financial market provides the public
According to investopedia, stock buy and sell stocks quickly and with investment opportunities
market refers to the collection of efficiently. and mobilizes savings, as well as
markets and exchanges where regular international capital, for productive
activities of buying, selling, and corporate financing. It is also argued
issuance of shares of publicly-held In recent times, Ethiopia has that market forces serve to discipline
companies take place. Such financial seen growth in the number of management and public ownership
activities are conducted through share companies under formation thereby improving the accountability
institutionalized formal exchanges or through initial public offerings. of the business sector.
over-the-counter (OTC) marketplaces Although some share companies
which operate under a defined set of have managed to mobilize huge History tells that share market
regulations. amounts of capital from the public, has existed in Ethiopia during
there were disappointments as the Imperial regime. During this
The concept behind how the stock some of the promoters have failed time, share dealing was handled
market works is pretty simple. to meet their promises. by the National Bank of Ethiopia,
Operating much like an auction house, department of Share Exchange and
the stock market enables buyers and There were also cases where later the bank allowed other financial
sellers to negotiate prices and make some companies have failed to be institutions and few private share
trades.
14 Abyssinia Business Nework ነሃሴ 2011 / August 2019