On March 21, 2025, a landmark development took place in Ethiopia’s financial landscape, as the Ethiopian Capital Market Authority (ECMA) officially licensed five new capital market service providers (CMSPs), marking the expansion of Ethiopia’s nascent capital market. Among the newly licensed entities were CBE Capital S.C. and Wegagen Capital Investment Bank S.C., both of which are poised to play pivotal roles in the country’s evolving financial sector. This expansion signals a significant step toward integrating Ethiopia into the global financial ecosystem, as the country  launched its stock exchange recently.

Yet, in the midst of this optimism, seasoned economist Kebour Ghenna recently took to his social media page to share his candid reflections on the situation, raising important questions about who will truly benefit from these reforms.

Kebour, who has been a keen observer of Ethiopia’s economic trajectory, pointed out that while the introduction of capital market service providers like CBE Capital presents opportunities for investment, there are underlying concerns about who stands to gain the most. In his view, the push for democratizing ownership, such as allowing ordinary Ethiopians to purchase shares in major state-owned enterprises like Ethiopian Airlines, may ultimately serve to benefit foreign investors and well-connected local elites more than the average Ethiopian citizen.

The post started with remark, “They say when you hear a rustle in the bushes, it’s probably the wind. But in Ethiopia these days, it could be something else entirely – a stock exchange, perhaps… or the whispers of foreign investors peering into our pantry.”

The Foreign Investors Dilemma

He reflected on the introduction of CBE Capital with a detailed analysis, which he views as potentially paving the way for privatizing major national assets. While these reforms are heralded as a step towards financial democratization, Kebour cautioned that the real beneficiaries might be foreign investors rather than the Ethiopian public.

He pointed out the familiar promises of financial empowerment and wealth creation, noting that similar promises have been made in other countries—countries like Lagos, Buenos Aires, and Cairo—without delivering the promised benefits to ordinary citizens. “The reality?” he asked, “The average Ethiopian – struggling with inflation, taxes, and food prices – doesn’t have extra cash to invest in a portfolio of blue-chip dreams.”

Ethiopia’s Growth Story with Crack

The seasoned economist’s reflection also drew attention to the fragility of Ethiopia’s economic growth. Kebour acknowledged that Ethiopia’s GDP has been growing, but the quality of that growth remains questionable. Much of the country’s expansion has been driven by debt-financed infrastructure, which, while contributing to growth, has also led to rising inflation and a shortage of foreign exchange. Additionally, the country remains heavily reliant on commodity exports, which are vulnerable to global market fluctuations.

Kebour emphasized that the influx of foreign direct investment (FDI) has often been accompanied by negative consequences, including the export of profits, low wages for Ethiopian workers, and continued dependency on external sources of capital. He painted a picture of an economy that may be growing in size but is not necessarily strengthening in a way that benefits the Ethiopian people.

The Investment Banking Gamble

As the new investment banks like CBE Capital begin to take shape, Kebour raised concerns about the potential privatization of Ethiopian Airlines, a national flagship and one of Africa’s most successful state-owned enterprises. While privatization is often presented as a way to modernize and make businesses more efficient, Gena warned that it could end up consolidating power in the hands of foreign investors, who would use their expertise to gain control over what they helped list on the stock exchange.

In his words, “Foreigners will help launch the exchange, bring ‘expertise,’ and then buy up what they helped list.” He also cautioned that without strong regulation and robust institutions, Ethiopia may fall prey to elite capture, with wealth and power concentrated in the hands of a few.

A China Comparison 

Kebour also compared Ethiopia’s economic reforms to China’s model, drawing a sharp distinction. “China builds its own banks, tech giants, and policy think tanks,” he pointed out, “and it never gives up control of its crown jewels.” In contrast, Ethiopia’s reliance on foreign investment and the promise of democratized finance raises questions about whether the country is relinquishing control over its most valuable assets, such as Ethiopian Airlines and Ethio Telecom.

A Call for Caution

In closing, he urged a cautious approach to Ethiopia’s financial reforms, stating that while opening up the economy to foreign investors is necessary, the terms under which this occurs matter greatly. He asked critical questions about who will ultimately benefit from these reforms: Will it be the Ethiopian public, promised opportunities for investment and wealth creation? Or will it be the foreign financiers and local insiders, who may use their expertise to dominate the market?

He concluded with a stark warning: “When state-run banks start running investment arms, partnering with unnamed foreign investors, and talking about giving ‘shares to the people,’ history tells us: this isn’t democratization. It’s corporatization.”