State-owned Ethiopian Insurance Corporation (EIC) is expected to be among the first companies to be listed on the country's stock exchange which is scheduled to start operations before the end of this year.
The sovereign wealth fund and government strategic investment arm of Ethiopian Investment Holdings (EIH), which controls EIC, has designated 10 state-owned enterprises for listing on the upcoming stock market.
Mr Tilahun Kassahun, CEO of the Ethiopian Securities Exchange (ESX), told The Reporter that EIC, Ethio Telecom, Ethiopian Shipping and Logistics Services Enterprise (ESLSE), and Berhanena Selam Printing Enterprise will be among the first up for listing on the market.
“We are concluding assessments on each company. This includes their financial capacity and their compliance with the way ESX is set to operate,” he said.
He added, “There are some corrective measures some of these public companies need to make, but we are sure at least two will make it by the official launch.”
EIC, one of 27 enterprises under EIH, has undergone a rigorous feasibility study to determine its eligibility for listing.
The ESX will open for business after raising more than ETB1.5bn ($13.6m) from 48 investors, including 12 private-sector insurers. The insurance companies that have acquired shares in ESX include Zemen, United, and Lion Insurance.
Three foreign investors – the Trade and Development Bank (TDB), FSD Africa, and the Nigeria Exchange Group – have also acquired stakes in ESX. EIH has a 25% stake in ESX through its subsidiaries while the remaining 75% has been sold to private-sector companies.
EIC was established in 1976 when the government took over 13 nationalised private insurance companies. The insurer operated as a monopoly for about 19 years. Ethiopia’s insurance market was opened to other insurance companies in 1994. At present, EIC has a market share of over 40% in terms of gross written premiums.
The establishment of the stock exchange is part of Prime Minister Abiy Ahmed's push to open up the state-controlled economy to more private investments.