The Ethiopian government has taken a step towards attracting foreign capital by drafting a framework that would compensate foreign portfolio investors for losses incurred due to the failure of licensed capital-market service providers. According to a report by Fitsum Tadesse, a staff writer at Addis Fortune, the framework aims to provide a safeguard for foreign investors. This move is expected to boost investor confidence in the country's capital market.
The draft framework proposes to route foreign portfolio investments through a custody chain, which would ensure that investors' holdings are secure and easily transferable. This is a common practice in many countries, and it is expected to provide an additional layer of protection for foreign investors. The framework is also expected to provide a clear mechanism for compensating investors in the event of a loss.
The Ethiopian capital market has been facing challenges in recent years, including the failure of licensed capital-market service providers. This has resulted in significant losses for foreign portfolio investors, who have been hesitant to invest in the country's capital market due to the high risk. The new framework aims to address these challenges and provide a more stable and secure environment for foreign investors.
The draft framework is part of the Ethiopian government's efforts to attract foreign capital and boost economic growth. The country has been facing significant economic challenges in recent years, including high inflation and a large trade deficit. Attracting foreign capital is seen as a key strategy for addressing these challenges and achieving sustainable economic growth.
The framework is expected to be implemented in the near future, although a specific timeline has not been announced. The Ethiopian government has been working with international experts to develop the framework, which is expected to be in line with international best practices. The implementation of the framework is expected to have a positive impact on the country's capital market and economy.
The Ethiopian capital market has been growing rapidly in recent years, with the number of listed companies and market capitalization increasing significantly. However, the market still faces significant challenges, including a lack of liquidity and a high risk of default. The new framework aims to address these challenges and provide a more stable and secure environment for investors.
The draft framework is a positive step towards attracting foreign capital and boosting economic growth in Ethiopia. The implementation of the framework is expected to have a significant impact on the country's capital market and economy, and it is seen as a key strategy for achieving sustainable economic growth.
Key points
- The Ethiopian government has drafted a framework to compensate foreign portfolio investors and route their holdings through a custody chain.
- The framework aims to provide a safeguard for foreign investors and boost investor confidence in the country's capital market.
- The implementation of the framework is expected to have a positive impact on the country's capital market and economy.
