Wednesday, February 18, 2009

“Ethiopia needs capital market”

February 13, 2009 - Andualem Sisay - East Africa Forum

Ethiopia needs to install stock market to attract more international companies and fuel its rapid growth a leading stockbroker, Jonathan Auerbach, has said. He said: “Big international companies usually invest through stock exchanges.”

Auerbach: “Ethiopia would be the most attractive investment destination in Africa, if it had a stock market and one could invest in Ethiopian businesses as cheaply as people are now investing through private transactions. Letting the private sector develop the capital market would lead to more transparency and more capital allocated to fuel Ethiopia’s rapid growth.”

He adds that international investors will continue to invest strongly both because prices are very attractive and to keep some assets in other currencies, in case of future declines in the value of the US dollar.

He also thinks that growth in the world economy is likely to resume in the next 12-18 months, but it will be lead by new players. Auerbach believes that consumers and internal growth in Brazil, Russia, India and China, and then in smaller economies such as those in Africa - including Ethiopia - will drive the next wave of economic growth.

“Banks, brewers, cement, cell phone and other companies across Africa continue to see strong growth, driven by their internal market,” he said.

Auerbach, and colleague Zoran Milojevic, Senior Vice President, Emerging Markets Equities at Auerbach Grayson, are currently touring investment prospects in Mauritius, Ethiopia, Kenya, Uganda, Tanzania, Zambia, Nigeria, Ghana and Ivory Coast.

The two brokers Auerbach said prices of shares in African markets have fallen in parallel with US, UK and other leading markets. However, many African businesses do not suffer the same business problems as in bigger economies.

They are visiting local partner Access Capital in Ethiopia from 11-14 February. They are to discuss business prospects and visit local manufacturing businesses into which Access Capital has invested and condominiums which sister company Access Real Estate is building, after raising money through a share offer.