The launching of the Ethiopian Securities Exchange (ESX) allows individuals and companies to buy and sell fractional ownership (shares) in Ethiopian corporations through a regulated, electronic secondary market.

Buying shares gives you fractional ownership of a business. As a shareholder, you can earn returns in two primary ways:

1. Capital Appreciation: Selling your shares at a higher price than what you paid when the company grows.
2. Dividends: Receiving a share of the company’s profits distributed directly to shareholders.

Step-by-Step Guide: How to Buy Shares on the ESX

1

Verify Your Identity & Eligibility

Prerequisite

1.Verify Your Identity & Eligibility:Prerequisite.

Before investing, ensure you have a valid, legally recognized Ethiopian ID—such as a Fayda Digital ID, Resident ID, or a valid Ethiopian Passport (or Origin Card / Yellow Card for Diaspora investors). You will also need an active mobile phone number and a local bank account.

2

Select an Licensed Investment Bank or Broker

Step 1

2.Select an Licensed Investment Bank or Broker:Step 1.

Individual investors cannot buy shares directly from the exchange floor; you must trade through an ECMA-licensed Trading Member (Brokerage or Investment Bank).

Research licensed trading members (such as First Addis Investment Bank, Siinqee Investment Bank, or Prime Capital). Compare their transaction commission fees, customer service options, and digital app features.

3

Open a Central Securities Depository (CSD) Account

Step 2

3.Open a Central Securities Depository (CSD) Account:Step 2.

To hold digital shares instead of paper certificates, your broker will help you register for a CSD Account.

Fill out the Know Your Customer (KYC) form via your broker’s physical office or mobile platform, upload your digital ID, and link your local bank account (such as CBE, Telebirr, or private bank accounts) for automated fund deposits and dividend payouts.

4

Download the Trading App or Log Into the Investor Portal

Step 3

4.Download the Trading App or Log Into the Investor Portal:Step 3.

Once your account is verified, download your broker’s mobile trading app or use the official “ንዋይ / Neway” mobile trading application integrated into the ESX Back Office system. Log in using your assigned client credentials to access live stock quotes, market depth, and company financial reports.

5

Fund Your Trading Account

Step 4

5.Fund Your Trading Account:Step 4.

Transfer the capital you intend to invest from your bank account or mobile wallet (e.g., Telebirr / CBE Birr) into your broker’s dedicated Client Custody Account. Always ensure you only invest funds you do not immediately require for short-term living expenses.

6

Research Listed Companies & Select Your Investment

Step 5

6.Research Listed Companies & Select Your Investment:Step 5.

Browse the companies listed on the ESX Main Market (such as pioneer listed banks and state-owned enterprises like Ethio Telecom) or the ESX Growth Market (SMEs). Analyze key performance indicators:

• P/E Ratio (Price-to-Earnings): Evaluates if a stock is over- or under-valued.
• Dividend Yield: Measures historical cash payouts returned to shareholders.
• Financial Growth: Check audited IFRS financial statements for revenue and profit growth.

7

Place a Buy Order

Step 6

7.Place a Buy Order:Step 6.

Submit your purchase request through the trading app or directly via your broker. Choose your order type:

• Market Order: Purchases the shares immediately at the current prevailing market price.
• Limit Order: Sets a specific maximum price you are willing to pay per share. The trade only executes if the market reaches your set price.

8

Order Execution, Clearing, and Settlement

Step 7

8.Order Execution, Clearing, and Settlement:Step 7.

The ESX Automated Trading System (ATS) matches your buy order with a corresponding sell order using a price-time priority algorithm. Once matched, the Central Securities Depository (CSD) handles the electronic settlement: funds are deducted from your account, and digital share certificates are credited directly to your CSD wallet.

Core Principles for Beginner Investors

• Start Small and Diversify: Spread your capital across multiple sectors (e.g., banking, telecommunications, manufacturing) to lower your risk profile rather than putting all your money into a single company.
• Focus on the Long Term: Stock market values fluctuate daily based on supply and demand. Avoid panic selling during short-term market dips; focus on the long-term fundamentals of the companies you own. ESX
• Watch Out for Transaction Costs: Every buy and sell order incurs small brokerage and exchange fees. Account for these fees when calculating your net profit margins.

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