Vol. 8, No.2: Legal Aspects of Stock Market Development in Ethiopia: Comments on Challenges and Prospects

Abstract

Ethiopia lacks the institutional and legal frameworks that regulate the market for stock exchange, and in effect, the current stock trading activity may grow into a largely unregulated space in which everyone speculates and plays for short-term gains. Introducing stock market amidst the proliferation of companies in Ethiopia can thus benefit the economy. It is natural to expect that both companies under formation and investors in existing companies sell and transfer their shares to third parties giving rise to the availability of tradable shares in the market. This comment is a modest attempt to show the desideratum of introducing the legal and institutional frameworks governing stock market in Ethiopia. It tries to analyze the existing legal framework on stocks and tries to juxtapose relevant literature to give picture on the legal aspects of stock market development. In view of the potential advantage and the concerns raised by stock market development, I argue that devising legal infrastructure that accommodates stock market in Ethiopia is a timely issue to catch up with the global trend, given the current demand for stock trading as revealed by the over-the-counter markets.