Economy
Authority Courts Foreign Capital: It Will Also Have to Let It Leave
Addis Fortune · 4 hours ago · Read the Full Story on Addis Fortune
AI SUMMARY
The Ethiopian Capital Market Authority has released a draft framework to open the securities market to foreign portfolio investors while establishing compensation, custody, and repatriation rules.
- The Ethiopian Capital Market Authority released a draft framework to open the emerging securities market to international capital.
- A proposed Investor Compensation Fund would compensate foreign portfolio investors for losses caused by the failure of licensed service providers or market infrastructure.
- Foreign portfolio investors must hold their securities through a licensed custody chain, utilizing international custodians working with approved Ethiopian sub-custodians.
- Eligible proceeds such as dividends, interest, and capital gains can be repatriated abroad one year after investment declaration, subject to National Bank of Ethiopia rules.
- Industry participants note that the framework could generate capital inflows, hard currency, expertise, and liquidity, while aiding banks in meeting minimum capital requirements.
- Analysts warn of potential sudden capital outflows and urge coordinated oversight, strong anti-money-laundering checks, and robust know-your-customer protocols as the market opens.
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