31 Mar The 1st Investment Bank in Ethiopia and My Take

There are 3,593 Business Brokerage firms (11,411 individual business brokers like myself) and 3,000 Investment Banks in the United States. As part of this mature industry, I’ve been closely monitoring the landscape since the formation of the Ethiopian Capital Market Authority and the launch of the Ethiopian Securities Exchange (ESX).

In this regard, last week, two things caught my attention:

💡 The formation of the first Investment Bank, and

💡 Its 1st CEO.

Though I am happy to witness this historic development happening, which should have been done decades ago, I had some questions:

✴️ Was it wise for the first investment bank to be government-owned? When I first heard about the establishment of CBE Capital, I assumed it was an arm of the government-owned and largest bank, Commercial Bank of Ethiopia (CBE).

✴️ How did CBE convince Zemedeneh Nigatu to be the 1st CEO of CBE Capital? Given his success as an active investor, exposure to the international investment environment, and global networks, I thought he was ‘unemployable. ’ 🙂 I was wondering and asking:

1. How much will they pay him without breaking their bank account?

2. What perks have been included in his CEO package for him to say yes? And so on…

The interview Zemedeneh gave to Art TV answered my questions:

⛳ First, CBE Capital is formed as a Public-Private partnership (70/30). Since this new industry is capital intensive and requires specialized expertise, robust technologies, and global connections, public-private partnerships between the government and private investors are smart moves.

Hopefully, down the road, CBE will unload some of its shares, become a minority, and eventually exit. I strongly advocate that the private sector should be the one leading the securities industry.

✅ The government should remain a Regulator.

✅ Self-regulatory not-for-profit organizations should be responsible for empowering and also making the professionals accountable.

⛳ Second, Zemedeneh took the CEO role because he is the leader of the 30% investors, plus it is a legacy thing for him. It makes sense, and I applaud his decision. A person like him could lay a strong foundation for investment banking by gaining exposure to the global market and making vast international connections.

Hopefully, CBE Capital won’t be the only Investment Bank that:

🍭 Underwrites securities,

🍭 Provides advice on mergers and acquisitions, and

🍭 Offers asset and wealth management services.

If you understand Amharic, watch the interview: