Ethiopia to Introduce Secondary Government Bonds In 2016

Tigrai Online, March 30, 2015

Ethiopia will introduce a secondary market in government and corporate bonds next fiscal year to expand the country’s fundraising options, a central bank official said. In 2014 Ethiopia sold one billion worth of bonds in a very short time. Government bonds are an effective way of raising much needed investment money to fund mega projects.

Acorrding to a Bloomberg news report the National Bank of Ethiopia will create the market in the year ending July 7, 2016.

“Rather than resorting to central bank borrowing the government can use this instrument to finance most of its” requirements, he said. “The equally important reason is corporations and new investments can get alternative means of issuing bonds and financing their needs.” The vice governor of monetary stability, Yohannes Ayalew was quoted in an interview in Addis Ababa.

In December 2014 for the first time ever, the Ethiopian government sold one billion dollars worth bonds, although Ethiopia only offered to sale one billion dollar worth of bonds the demand by investors reached two billion dollars according to The Wall Street Journal.  It was one of the largest first time bond sales from Africa.

The reason there is such a high demand for the Ethiopian bonds is based on solid reasons. Ethiopia has one of the fastest growing economies in the world.  Ethiopia has the most stable governments in Sub Saharan Africa. Ethiopia with 92 million people is the second largest most populous country in Africa next to Nigeria. A vast potential market and man power to companies and investors. All the above combination of the right reasons makes Ethiopia absolutely irresistible to western investors who are looking for the next biggest thing in the world.

Ethiopia is undertaking massive infrastructure building never seen in it’s entire history.

Some of the mega projects underway or recently completed include

• Hydro Electric Dams
• Wind Power Farms
• Geothermal Power projects
• Light Train and Train projects
• Fertilizer Factories
• Sugar Factories
• Potash mining
• Natural Gas export
• Highways
• Universities
• Cement Factories

The huge spending on those mega projects like the GERD is helping the Ethiopian economy in a phenomenal scale. The mega projects once they get completed in turn boost the economy to grow and they are long term investments for the Ethiopian people. It is a remarkable positive cycle which is taking Ethiopia out of poverty and bringing it to the middle income countries of the world. Last week a credible report said Turkey, Ethiopia and Nigeria will be some of the largest economies in the world in the next fifteen years.

The international money markets have scientists researching and predicting what would happen in the next hundred years. Based on scientific studies and analysis they invest their billions on the countries and economies that would pay off tremendous dividends. Ethiopia is one of those safe bets for the international investors to pour in their money.

Ethiopia gets the Global Foreign Direct Investment and the investors get rewarded handsomely with great profits on their investment. It is a win win situation for all involved.