🤵‍♀️ Meet the New Suits in Town

Welcome to the latest edition of ፍራንክ Digest!

Your weekly brief on all things Finance and Investing. Quick, enjoyable reads for busy professionals in 5 minutes or less.

Here’s what’s coming your way:

• 🕴️ New Kids on the Stock: Ethiopia Licenses First Investment Banks

• 🤷🏾‍♂️ Paycheck to Paycheck, What’s There to Invest?

• 🗝️ The Key Takeaways

Thanks for reading!

What’s Cooking in the Capital Markets?

Investing

Something quietly historic happened last week, and no, it wasn’t the return of Seifu on EBS from a production break.

Ethiopia’s Capital Market Authority (ECMA) handed out five more licenses to service providers—including the country’s first-ever investment banking licenses.

And just like that, Ethiopia's long-promised capital market revolution has taken a couple more steps out of PowerPoint presentations and into real life.

But before we get ahead of ourselves, let’s back up and ask: what on earth is an investment bank anyway?

What is an investment bank?

Most of us interact with retail or commercial banks—the kind where you deposit money, take out loans, complain about service fees, and occasionally get asked why you withdrew 40,000 birr in cash on a Tuesday afternoon. These banks deal with individuals and businesses in day-to-day financial needs.

Investment banks, on the other hand, live in a more glamorous world. They’re not here to hold your salary or lend you car loan money. They work with companies, governments, and investors on things like:

• Raising capital (through things like Initial Public Offerings (IPOs) and bond sales)

• Mergers and acquisitions

• Managing investment portfolios

• Structuring complex financial products (don’t worry, we’ll keep it simple here)

Think of investment banks as the financial architects and matchmakers of the business world. They help a company go public, advise on billion-birr deals, and provide the bridge between those who have big money and those who need it.

So why is Ethiopia only now issuing licenses for these kinds of institutions?

First, meet the chefs.

Let's roll out the red carpet for the newly licensed institutions:

1. CBE Capital S.C.: A fresh-faced investment bank, this entity is a subsidiary of the Commercial Bank of Ethiopia (CBE), the nation's largest state-owned lender. CBE Capital aims to bridge the gap between big ideas and the capital needed to bring them to life.​

2. Wegagen Capital Investment Bank S.C.: Another investment banking pioneer, this firm is affiliated with Wegagen Bank.​

3. Ethio-Fidelity Securities S.C.: Stepping into the role of a securities dealer, this company is ready to buy and sell securities, adding much-needed liquidity to our nascent capital market.​

4. HST Investment Advisory Services PLC: As a securities investment advisor, HST is on a mission to guide investors through the maze of investment opportunities.​

5. Equation Securities Investment Advisor PLC: Another navigator in the investment advisory realm, Equation Securities aims to provide tailored advice to help clients achieve their financial goals.​

A slow-cooked reform finally coming out of the oven

For years, Ethiopia’s financial sector has been tightly controlled, with very little room for new players or innovation. Banks mostly focused on deposits and lending. Capital markets? Nonexistent. Investment banks? Theoretical.

But in recent years, things have been shifting. The government has been pushing for financial sector liberalization—albeit slowly and cautiously. We saw the establishment of the Ethiopian Capital Market Authority (ECMA), the draft proclamations for stock exchanges, and now… actual investment banking licenses, along with supporting actors.

These investment banks and securities advisors are the first players through the door. Their job? Start building the financial infrastructure that will allow companies to raise money from the public, investors to participate in capital markets, and the economy to grow beyond aid and debt.

Why does this matter to you (yes, you)?

If you’re running a business in Ethiopia, this could eventually give you a new way to raise money—by issuing shares or bonds, instead of chasing after loans with something like 18% interest.

If you're an investor or just someone who wants to grow their money, this is a hint that opportunities are (slowly) being built to move beyond fixed deposits and informal equb savings.

If you’re just watching from the sidelines and hoping for a more modern, diversified economy, this is a piece of the puzzle finally clicking into place.

Of course, there’s a long road ahead. We still don’t have a fully functioning stock exchange (ECMA says it'll happen by mid-2025), and these newly licensed investment banks will need time to staff up, set up operations, and gain the trust of corporate clients.

Final thoughts

It’s too early to start popping champagne, but we can definitely raise a glass of እስፕሪስ to this milestone.

The licenses issued to CBE Capital and Wegagen Capital in particular mark a quiet, technical shift in the financial system—but one that could open up all kinds of possibilities.

Now let’s hope the regulators, the private sector, and the banks themselves don’t lose steam. Because if there’s one thing Ethiopia could use right now, it’s more efficient, transparent, and modern ways to fund its ambitions.

We'll be watching—and reporting—with one eye on the data and the other on the drama.

Key Takeaways

1. Capital markets just got real: Ethiopia licensed five capital market players, signaling that the long-awaited capital market rollout is finally getting out of the PowerPoint phase and into real-life execution.

2. Not your average bank: Investment banks don’t do savings accounts or car loans—they help companies raise money, advise on big deals, and connect investors to opportunities.

3. A slow but hopeful revolution: This move is part of Ethiopia’s cautious push to modernize its financial sector—if the momentum holds.

ፍራንክ Picks 

🚶🏽 Interesting event: The Ethiopian Aviation Forum 2025 [Th April 24, 2025 @9]

🗞️ In the news: Ethiopian Airlines hails taxi with $30M program deal 

♟️ Innovation: Kabu.et blends Ethiopian design with modern aesthetics

New Banks, Same Old Struggles

Investing

So Ethiopia just handed out five shiny new licenses for investment advisors and investment bankers—cue the handshakes and press releases.

Suits are being dry-cleaned, corporate logos redesigned, and LinkedIn bios updated. But as we toast to this new financial frontier, here’s the follow-up question that’s harder to squeeze into a headline:

Who’s there to advise? Can regular Ethiopians actually afford to invest in any of this?

Spoiler alert: it’s complicated.