The Ethiopian Capital Market Authority has announced the official registration of a comprehensive legal framework designed to enable the wider public to actively invest in the country's financial markets and channel citizens' savings into productive investment avenues.
This historic milestone reinforces the nation's efforts to make its emerging capital market more participatory and viable.
According to a press release issued by the Authority on September 13, 2019 (Ethiopian calendar), the "Collective Investment Schemes Operation Directive No. 1150/2019" was officially registered and approved by the Federal Democratic Republic of Ethiopia's Ministry of Justice.
The directive was formulated under Capital Market Proclamation No. 1248/2013 as a broad legal framework governing the orderly establishment of collective investment schemes, management of registration procedures, operations, and administration, alongside detailing the obligations of scheme operators, custodians, and other professional entities.
Highlighting the broader economic significance of the directive, Authority Director General Hana Tehelku stated, "This directive is a vital step in channeling the savings of Ethiopians into productive investment through professional management and strong investor protection".
She further emphasized that the framework expands capital market access, creating a broad pathway for the general public to share in the country's economic growth.
Under the new directive, six primary categories of investment funds have been officially recognized, which include Money Market Funds, Project Funds, Special Property Investment Funds, Exchange-Traded Funds (ETFs), Alternative Investment Funds, and Special Designation Funds.
The directive strictly stipulates that no entity may offer a scheme to the public without obtaining legal authorization and registering the fund with the Authority.
To ensure rigorous investor protection, scheme assets must be held by independent custodians separate from scheme operators, and funds are strictly mandated to maintain continuous public disclosure of their business and financial information.
Fund operators and custodians obtain their legal licenses pursuant to the Capital Market Service Providers Licensing and Supervision Directive No. 980/2016. Furthermore, the Authority noted that it will closely monitor registered funds and service providers to safeguard market integrity.
Finally, the Authority confirmed its full readiness to collaborate with fund operators, custodians, investors, and other stakeholders to build a robust, transparent, and trusted collective investment fund market across the country.