Ethiopia opens up: three ways in

Article

Ethiopia opens up: three ways in

21 October 20269 min read

Part 1 of 2

Two years after Ethiopia began selling shares in Ethio Telecom, citizens own about 1% of the company and foreign investors own none. Ethiopia is selling ownership, not control: small slices go to its own savers on the new stock exchange, while the state keeps the companies. For an investor looking to enter, that leaves three doors, and today the most open one is a partnership with the state holding company, Ethiopian Investment Holdings (EIH).

The state still owns about 99% of Ethio Telecom, and foreign capital is arriving through EIH, not the exchange

Ethio Telecom offered 100 million shares, a 10% stake, at ETB 300 each from October 2024. Only individual Ethiopian citizens could buy, up to 3,333 shares each. It sold 10.7 million shares to 47,377 people, raising ETB 3.2 billion against a target of ETB 30 billion. Because the 100 million shares were 10% of the company, the shares sold equal about 1.07% of Ethio Telecom (RA calculation).

Meanwhile, one of the largest new foreign investments in the country, Aliko Dangote’s urea fertiliser plant at Gode, is a joint venture in which EIH holds 40%. Foreign portfolio investors still cannot buy on the Ethiopian Securities Exchange (ESX).

A new team now holds the decisions that set the next phase of the opening

The people who decide who may buy Ethiopian assets changed in October.

  • New leaders. On 8 October, Ethio Telecom CEO Frehiwot Tamiru became Minister of Innovation and Technology; Tariku Demissie has been acting CEO since 16 October. On 10 October, Dagmawit Shiferaw replaced Hana Tehelku as head of the Ethiopian Capital Market Authority (ECMA), and EIH gained two deputy CEOs.
  • Draft rules for foreign buyers. On 29 September, ECMA posted a draft Foreign Portfolio Investment Regulation. It is a draft, not yet in force, but it is the first published text of the rules that would let foreign funds buy listed Ethiopian shares.
  • New offers. Dangote’s Nigerian refinery IPO, billed as Africa’s largest, is open to Ethiopian investors until 23 October, but only to up to 100 qualified buyers. On 15 October he pledged to list at least 10% of the Gode venture on the ESX once production is stable, with no date set.
  • Open questions. No decision has been announced on the 89.3 million Ethio Telecom shares that did not sell.

Door 1: the stock exchange is open to Ethiopians, attractively priced, and still closed to foreign funds

The ESX opened in January 2025, Ethiopia’s first organised exchange in about half a century. It now has seven listed companies: Ethio Telecom and six private banks. The banks listed by introduction, which means their existing shares began trading but no new money was raised.

The price looks low; access is the constraint. The Ethio Telecom offer valued the whole company at ETB 300 billion (1 billion shares at ETB 300). In 2025/26 the company reported earnings before interest, tax, depreciation and amortisation (EBITDA) of ETB 113.1 billion, so the offer priced it at under 3 times EBITDA (RA calculation). Ethio Telecom’s own chief executive blamed the shortfall on the citizens-only rule, the purchase cap, the bar on institutions and limited public awareness.

Trading is thin. In the week of 28 September to 2 October, ETB 510 million of shares changed hands, and about 98% of that value was in one stock, Awash Bank. Ethio Telecom, the most widely held company, was about 1%. It closed that week at ETB 430.10, above its ETB 300 offer price.

The float is small. The exchange’s standard main-market rule asks for at least 15% of a company’s shares in public hands, held by at least 300 investors. Ethio Telecom’s public float is about 1%.

Who can use this door today: Ethiopian citizens, and, once licensed, Ethiopian mutual funds and other collective investment schemes, allowed under a directive registered on 23 September. Foreign funds must wait for the portfolio investment regulation to be finalised.

Door 2: a joint venture with EIH is the most open route, and it puts the state on your side of the table

EIH is wholly owned by the government and manages more than 40 state enterprises, including Ethiopian Airlines and Ethio Telecom. It presents itself to foreign investors as a partner: it handles permits, land and access to foreign currency in return for a share of the venture.

The model in practice. In August 2025 Dangote Group and EIH signed a shareholders’ agreement for the Gode urea complex in Somali Regional State, with Dangote holding 60% and EIH 40%. The budget has since grown from USD 2.5 billion to more than USD 4 billion, for 3 million tonnes of urea a year. On 15 October, Dangote pledged to sell at least 10% of the venture on the ESX once production is stable.

EIH sits on several sides of the market. It owns the largest sellers, holds 25% of the ESX (the minimum state stake the law requires), and its chief executive, Brook Taye, chairs the exchange’s board. Saudi Arabia’s sovereign fund owned its exchange outright until 2021, so this is not unusual. But it means the partnership door and the listed door lead back to the same institution.

Reform, not privatisation. Brook Taye has said the government has no privatisation strategy, only a reform strategy for state firms. A planned sale of a large Ethio Telecom stake to a foreign telecoms partner was shelved in 2025. For investors, that means minority stakes and joint ventures, not control of the state’s flagship companies.

Exhibit 1
Two of the three doors into Ethiopia lead back to EIH
Routes into Ethiopia for outside investors, October 2026
Ethiopian Investment Holdings (EIH)
State-owned. Manages more than 40 state firms, holds 25% of the stock exchange, and its CEO chairs the exchange’s board.
Sells stakes
Co-invests
No state partner
Via EIH: sells minority stakes
Door 1
The stock exchange
Open toEthiopian citizens
Foreign fundsDraft rules only, published 29 Sep 2026
Ethio Telecom: about 1% of the company sold
Via EIH: co-invests for equity
Door 2Most open today
A partnership with EIH
Open toForeign investors
How it worksEIH takes equity in return for permits, land and access to dollars
Gode urea plant: Dangote 60%, EIH 40%
No state partner
Door 3
Direct entry
Open toForeign firms, sector by sector
Trade-offFull control, but the investor carries permits and currency risk alone
Freight forwarding: fully open to foreign ownership since May 2026
Sources: ECMA; Ethiopian Securities Exchange; Ethio Telecom; US State Department, 2026 Investment Climate Statement; The Reporter; Lex Africa. Accessed 21 Oct 2026. Analysis: Regenerative Africa.

The partnership door is the most open today; the listed door is open to Ethiopians only; the direct door depends on the sector. Sources: ECMA, ESX, US State Department, The Reporter, Lex Africa, October 2026.

Door 3: direct entry is opening sector by sector, with conditions attached

Outside the exchange and EIH, foreign companies can now enter some sectors on their own.

  • Telecoms. Safaricom Ethiopia, led by Kenya’s Safaricom and backed by the Vodacom and Vodafone group, paid USD 850 million for the country’s first private telecoms licence and now competes with Ethio Telecom.
  • Trade. The Ethiopian Investment Board has opened export, import, wholesale and retail trade to foreign investors, and in 2025 cut the minimum capital they must bring by more than half.
  • Logistics. On 25 May 2026 the Board removed the 49% cap on foreign ownership in freight forwarding, so foreign firms no longer need an Ethiopian partner.
  • Finance. The first foreign investment bank was licensed by mid-2026. Ethiopia’s opening of banking to foreign capital will be the subject of a future RA brief.

The direct door gives full control, but the investor carries the bureaucracy and the foreign-exchange risk alone. That is the trade-off EIH’s partnership offer is built to address.

Ethiopian savers and EIH gain most from the current design; foreign portfolio funds wait

Exhibit 2
Ethiopian savers and EIH gain most; foreign portfolio funds wait
Who gains and who loses from how Ethiopia is opening, October 2026
Who
Position
What it means for them
Ethiopian retail investors
Gain
First access to the state’s best assets at a low price, but in small amounts and with few shares trading
EIH
Gain
Keeps control of its flagship companies and becomes the counterpart for any large foreign deal
Partners such as Dangote
Trade-off
A state partner that clears permits and currency, in exchange for shared ownership and influence
Ethiopian pension funds and insurers
Shut out for now
Barred from the Ethio Telecom offer; could anchor the next one if it opens to institutions
Foreign portfolio funds
Waiting
Locked out of listed shares until the portfolio investment regulation is final
Value kept in Ethiopia
Ownership and future dividends stay with Ethiopians: 47,377 citizen shareholders, and the state through EIH, which Ethio Telecom plans to pay ETB 43.1 billion in dividends in 2026/27. The cost is speed: by limiting who could buy, Ethiopia raised a tenth of what it sought.
Sources: Ethio Telecom, share sale announcement, 26 May 2026; Capital, Sep 2026; Birr Metrics, 26 May 2026; ECMA. Accessed 21 Oct 2026. Analysis: Regenerative Africa.

Value kept in Ethiopia. The current design keeps ownership, and future dividends, with Ethiopians: the 47,377 citizen shareholders, and the state through EIH. Ethio Telecom plans to pay the government ETB 43.1 billion in dividends in 2026/27. The cost is speed: by limiting who can buy, Ethiopia raised a tenth of what it sought from its first sale.

What to watch in the next 12 months

  1. The final portfolio investment regulation. Whether ECMA finalises the 29 September draft, and what limits it sets on foreign holdings and taking money out of the country.
  2. The 89.3 million unsold Ethio Telecom shares. Whether they are offered again, and whether pension funds, insurers and the new mutual funds may buy.
  3. Ethio Telecom’s first dividend to private shareholders and its first annual general meeting, plus the appointment of a permanent chief executive.
  4. New listings. The ESX has given 11 companies in-principle approval to list. Watch for the first listing that raises new money, and the first by another state firm.
  5. The northern conflict, as a test of the ESX. Fighting between federal forces and the Tigray People’s Liberation Front resumed in late September. On 16 October the prime minister named a caretaker government for Tigray and called for elections there within six months. How prices and trading hold up will show how much risk Ethiopian investors are pricing in.

The full report

The subscriber intelligence report includes Ethiopia’s listing and stake-sale pipeline, the sector entry rules for foreign investors, and an investor playbook comparing the three doors. Part 2, out next week, assesses EIH’s strategy so far and where it could get more from the market. Sign up here

Sources

All accessed 21 October 2026. RA calculations are labelled in the text.

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