Page 18 - Abyssinia Business Network ABN August 2019

conducted a research on the Market finance a wide range of infrastructure
Potential Assessment and Road Map thereby satisfying social needs as well
Development for the Establishment of as economic growth and jobs. Stock
Capital Markets in Ethiopia where the markets are perceived as a tool for the
findings highlighted the significance promotion of the financial sector and
and inevitability of financial market in the development of private savings,
Ethiopia. thereby supporting the non-monetary
funding of the economy and the fight
When studying the economies of against inflation.
developing countries, the first thing that
becomes apparent is the existence of Challenges of Stock exchange
immense and, to a considerable extent,
unemployed human resources as well 1. Share Selling and acquisition
as an acute shortage of capital which is Experience: companies and
a major constraint in the realization of shareholders sell their shares for
economic development. Recognizing different reasons among which are to
the role that securities markets play in solve current finance shortage, to buy
mobilizing capital, more than a dozen an asset, support investment or expect
African countries have established a risk of loss. As per own survey,
stock markets, excluding Ethiopia. most share owners acquired their
shares through initial public offering
In a study undertaken by the African and it took them more than 15 days
Union on the establishment of the to end the acquisition process. When
Pan African stock exchange, stock they want to sell shares they will getting Image
exchanges are said to have a reputation directly approach and sell it to share
for encouraging greater economic buyers or sell it to relatives or friends.
dynamism and producing higher levels Share companies also issue shares Shares:Looking into the
of wealth by providing investors with indifferent ways like initial public challenges and prospects of
the opportunity to share the risks offering to the public or the existing establishing stock exchange
and profits of enterprises. Thus they shareholders and managers, but they in Ethiopia, let’s first see the
improve market mechanisms in order did not hold any other companies challenges that the shareholders
to raise and allocate scarce financial share. face in selling their shares.
resources, mobilize local capital, Concerning the share price most
attract foreign direct investment and 2. Share selling and Issuance of the shareholders agree that
allocate resources to projects likely to Plan: Even though shareholders and the share price is not fair that
be beneficial to the economy. share companies plan to sell their lead them in devaluating their
shares they usually face problems in share value and does not want
Although some analysts view stock getting the buyers for their shares at a to buy back the shares. Most of
markets in developing countries as fair price and at the time where they the surveyed share companies
“casinos” that have little positive need the money most. But if there received compliance concerning
impact on economic growth, recent were well organized stock exchange selling back the shares to
evidence suggests that stock markets market it will provide ready market them, but the companies solve
can give a big boost to economic whereby investors could easily buy such issues by consulting the
development. The stock exchange is and sell their share which implies that shareholders to stick with the
a necessary aspect of commerce that there is a much need of the market, share and convincing them
helps quickly and easily trading of consulting and assistance from the the prospected future of the
assets. It is an alternative means for shareholders. companies’ income and return
securing capital helping governments which implies that share selling
and private sectors to mobilize capital to 3. Challenges in Selling process in Ethiopia is not easy

16 Abyssinia Business Nework ነሃሴ 2011 / August 2019