Benefits And Challenges Of The Upcoming Capital Markets In Ethiopia

Ethiopia is one of the few countries in Africa that does not have a stockrnmarket. Currently, the government has a plan to establish a secondary cap-rnital market by 2020. There are controversial issues among researchers re-rngarding the relevance of the capital market in developing countries. Thus,rnthis research is aimed to clear these issues by analyzing the country'srncurrent economic situation. The researcher is used the country's currentrnprevailing secondary data from the web pages of NBE, World Bank andrnother sources and try to persuade some of the bene ts and challenges ofrnthe country regarding the upcoming implementation of the capital mar-rnkets. Based on the data sources, I have found out that the capital marketsrnhelp to complement the development of the nancial sector, highly e -rncient mechanism for channeling local savings to investments, reduce costrnof capital and unemployment, o er liquidity to investments, reduce invest-rnment risks, help for government nancing and contribute for uni cation ofrnthe country. However, capital markets are not free from challenges. Somernof the challenges that the emerging market in Ethiopia faces are lack ofrnexperience of expertise, e ective regulation and supervision, nancial in-rnfrastructure and investors' nancial literacy. Finally, ways to alleviaternthese challenges are forwarded to the respective bodies.

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