Ethiopia Opens the Capital Market to Small Investors, and There Is Almost No One to Run the Funds

Ethiopia's capital markets regulator has registered a framework for collective investment schemes, opening the country's financial markets to ordinary savers for the first time. The Collective Investment Schemes Operation Directive No. 1150/2026 was registered and approved by the Ministry of Justice on 23 September 2026.

The directive sets out six types of scheme. Addis Fortune's reading of it is that the thin supply of fund managers, custodians and valuers could leave the market in the hands of a very small number of licensees.

What a collective scheme is for

Until now, participating in Ethiopia's capital market meant buying a security directly. That suits an institution and almost no one else: it requires a minimum size, a view on individual issuers and somewhere to keep the paper.

A collective investment scheme pools small sums, puts a licensed manager in charge of allocation and a separate custodian in charge of the assets. It is the instrument that turns a securities exchange from a place where banks and insurers trade with each other into somewhere a salaried person can put money.

That is the intent. The constraint is the licence list.

Three licences, not one

A working fund needs three separate parties, and Ethiopia is short of all three:

• Fund managers, who must be licensed and capitalised to take discretionary control of other people's money.
• Custodians, who hold the assets independently of the manager — the structural protection that makes the whole arrangement safe to retail savers.
• Valuers, who price holdings that do not trade often enough to price themselves. In a market as young as Ethiopia's, this is the hardest of the three, and the least discussed.

Where a market has two or three licensees in each role, the manager and the custodian tend to know each other well. Independence on paper is not independence in practice, and the first retail losses in a young fund market are usually a valuation dispute, not a market fall.

Open

The regulator has not published the licensing timetable, the capital requirements for each role, or how many applications are in hand. Nothing announced so far says whether foreign fund managers may be licensed, or on what terms. No fee cap has been disclosed, and the tax treatment of returns to unit holders has not been set out.

Sources: Addis Fortune, 24 September 2026, Birr Metrics, 23 September 2026