In a move that may slow down the country's development of open capital markets, Ethiopia has excluded diaspora citizens and foreign nationals from its initial public offering (IPO) for Ethio Telecom, a state-owned telco with a 95% market share. The IPO, which aims to raise $255 million by selling 10% of the telco giant through Ethiopian Investment Holdings (EIH), is only available to Ethiopian citizens physically present in the country.

This restriction may limit foreign investment in the sector, which is a key part of Prime Minister Abiy Ahmed's plan to liberalize the financial sector and modernize the economy. Despite the entry of a Safaricom-led consortium in 2022, Ethio Telecom remains the dominant player in the Ethiopian telecommunications market, with an estimated market share of 94.5% as of June 2024.

The Ethiopian Securities Exchange (ESX), which is expected to start operations this month, has already raised $26.6 million from investors, including the Nigerian Exchange Group (NGX), FSD Africa, and Trade and Development Bank Group (TDB). The bourse plans to list over 10 companies by the end of 2025, attracting foreign investments in sectors controlled by the state, such as insurance, banking, and telecoms.