Ethiopia Nears Approval of Foreign Portfolio Investment Directive to Open Capital Markets

As reported by Capital Newspaper

Summary

• The Ethiopian Capital Market Authority is close to finalizing a landmark Foreign Portfolio Investment directive that would allow foreign institutional investors, Development Finance Institutions, and individual investors to trade in local equities and debt instruments for the first time. The draft is currently under review by the Council of Ministers.
• Officials describe the directive as a critical piece of Ethiopia's financial liberalization agenda, marking a historic shift from decades of a closed financial system. The move aligns with the broader transition from a state-led economy to a market-oriented financial model and aims to improve liquidity and attract foreign capital to the Ethiopian Securities Exchange.
• The directive would complement the ESX's launch and the pipeline of bank listings expected in 2026–2027. Combined with the law opening banking to foreign competition, it signals Ethiopia's accelerating integration into global capital markets.
• For BirrValue users, foreign portfolio investment inflows would add a new channel of FX supply to the economy beyond exports and remittances. Over time, this could support more stable exchange rates and tighter spreads. Compare current bank rates on [BirrValue](/banks) and check [Send Money](/send-money) for the best remittance options.