Ethiopia Drafts 10% Cap on Foreign Investors

ETHIOPIA · MARKETS

Ethiopia wants foreign money in its young stock market, but only within strict ownership limits. A public consultation on the draft rules was held in late October.

Ethiopia’s Capital Market Authority (ECMA), the national securities regulator, held a public consultation on a draft regulation for foreign investors. ECMA announced it on Tuesday, 27 October.

The draft would let foreign investors buy shares, bonds and fund units, but cap how much of one company they can own. For US readers, it shows how open Ethiopia’s new market will be to outside money.

The Foreign Ownership Limits Explained

The draft sets three limits on shares. No single foreign investor, including affiliates and anyone acting in concert, may hold more than 10% of a company’s paid-up capital.

Category I investors may hold up to 15% with the authority’s prior approval. That group includes governments, central banks, sovereign wealth funds, pension funds, banks, insurers and investment funds.

Everyone else is Category II, which covers foundations, corporates, family businesses, individuals and non-resident retail investors. They stay under the general 10% limit.

All foreign investors together may not hold more than 30% of one listed company. The regulator may approve a higher limit for specific companies, sectors or types of instruments.

Buying above 10% needs the regulator’s approval or must follow Ethiopia’s Investment Proclamation 1180 of 2020. Another law or a company’s own regulator can also allow a larger holding.

Control and Holding Periods

Foreign portfolio investors may not sit on a company’s board or take part in its management. Doing so may reclassify the stake as direct investment, which falls under separate rules.

Voting at shareholder meetings and filing shareholder proposals do not count as management. A voting board seat, daily executive authority or veto rights over core decisions do.

The draft sets a minimum holding period of at least one year for foreign investments. The regulator may adjust or waive it by directive, and must review it with a view to removing it over time.

All assets must be held by a custodian licensed by the authority. A custodian is a firm that safekeeps securities on behalf of the investor.

Taking Money Out

Investors may send home sale proceeds, dividends, interest and capital gains in foreign currency through authorised dealers licensed to handle foreign exchange. This is allowed only after the holding period, settlement and tax payments.

The National Bank of Ethiopia, the central bank, may impose temporary limits on repatriation in a crisis. Examples include a severe shortage of foreign exchange reserves or a balance-of-payments crisis.

No such measure may last more than 180 days unless renewed under the law. It must be public, proportionate and reviewed regularly.

Who Decides and What Happens Next

The cabinet, called the Council of Ministers, would issue it under Article 108 of the 2021 Capital Market Proclamation. It takes effect once published in the Federal Negarit Gazette, the official journal.

A coordination committee, chaired by the finance minister, may bring together the central bank, the regulator and other agencies. Its members would include the Ethiopian Investment Commission and the Financial Intelligence Service.

Related Rio Times reports are Ethiopia Stock Exchange, Africa’s Newest Capital Market and Who Runs Ethiopia’s Economy, the Key Players in 2026. The Ethiopia hub lists every Ethiopia report.

What It Means for You

US asset managers and funds would count as Category I, while individual Americans would be Category II. Every investor would need a licensed custodian in Ethiopia.

Nothing in the draft is law yet, so no American can buy under these rules today. Investors should watch the final text for the holding period and repatriation terms.

What Is Not Known

ECMA does not state the date of the consultation, who took part or which changes it will make. Its notice is dated Tuesday, 27 October.

The draft carries no regulation number or signing date. Cabinet approval has not been announced.

Some early summaries gave 15% as the general cap. The draft text sets 10% for most investors and 15% only for Category I with approval, and the numbers may still change.

The draft names no first listings or bonds for foreign buyers. It is also unclear when foreign money could begin to flow.

What Comes Next

ECMA says the draft continues to be reviewed and refined after the consultation. It has not published a timeline.

A final text must still be issued by the cabinet and published in the gazette. The one-year holding period could later be changed by ECMA directive.

Frequently Asked Questions

How much of an Ethiopian company can a foreigner own?

Under the draft, one foreign investor may hold up to 10% of a company’s paid-up capital. Category I institutions may reach 15% with approval, and all foreigners together 30%.

Is the Ethiopian rule already law?

No, it is still a public consultation draft of a cabinet regulation. It takes effect only when published in the Federal Negarit Gazette.

Can foreign investors take their money out of Ethiopia?

Yes, through authorised dealers after the holding period and tax payments. The central bank may impose temporary limits, which may not last more than 180 days unless renewed.

Who counts as a Category I investor?

Governments, central banks, sovereign wealth funds, pension funds, banks, insurers, asset managers and investment funds. Individuals, family businesses and corporates are Category II.

Sources: Ethiopian Capital Market Authority, Foreign Portfolio Investment Regulation, public consultation draft (updated 29 September 2026); Ethiopian Capital Market Authority, notice of 27 October 2026 on the public consultation; Ethiopian Capital Market Authority, laws and regulation (all accessed 1 November 2026).

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