Why Ethiopia’s Stock Market Needs Tax Breaks to Take Off

Ethiopia finally has a stock market. After years of whispers, reports, and cautious optimism, the Ethiopian Securities Exchange (ESX) is no longer a dream on paper—it’s real. But if you think this is enough to build a vibrant financial future, think again.

You can’t plant a tree and forget to water it. That’s exactly what we’re doing if we launch a stock exchange without meaningful tax incentives for investors. Without the right mix of policies, the ESX risks becoming a boutique platform for the elite—when it should be a people's engine for prosperity.

In modern economies, people invest when the risk is balanced with reward. And one of the clearest ways governments sweeten the deal is through tax breaks.

In Rwanda, long-term investors get full exemptions on capital gains. In Kenya, some IPO participants enjoy tax holidays. In the U.S., there are entire retirement savings plans built around tax-free stock investing. Why? Because governments there understand: no one builds wealth with both hands tied behind their back. Ethiopia, sadly, is yet to catch up.

Yes, we removed capital gains tax on startup shares and opened the door for private listings. But that’s just the beginning. If we’re serious about building a stock market that includes farmers, teachers, students, diaspora returnees, and women entrepreneurs, we must go further.

5 Bold Tax Ideas to Democratize Investment

• 0% Capital Gains for Long-Term Holders: Let’s reward patience. No tax on profits if shares are held for more than a year. Encourage investing—not gambling.
• Dividend Tax Relief for Small Investor: Why punish success? Lower or eliminate dividend taxes for investors below a certain income level. Let passive income become common.
• IPO Tax Holidays for Listed Firms: Going public isn’t cheap. Offer newly listed companies 3–5 years of income tax relief. More listings mean more jobs and more ownership.
• Diaspora Investor Incentives: They already send millions in remittances. Now let them invest in Ethiopia tax-free for a period. They’ll come running.
• Tax-Free Investment Accounts: Create ESX-linked savings accounts for youth, women, and pensioners. Think of it as Ethiopia’s own retirement revolution.

Right now, only the brave or the wealthy will touch the stock market. That’s not how you build a people’s economy. If Ethiopia wants the ESX to be more than a PR stunt, tax reform is non-negotiable.

Imagine a young woman in Jigjiga investing in a green tech startup. A coffee farmer in Sidama holding shares in a logistics company. A taxi driver in Addis buying into a brewery. That’s not fantasy—it’s the future, if we build the right foundation.

Tax Policy Is Nation-Building
Let’s stop thinking of taxes as tools for punishment or bureaucracy. They’re instruments of inclusion. With the right incentives, Ethiopia can light a fire under its economy—bringing in new capital, building public trust, and turning everyday citizens into stakeholders in national success.

The ESX has been born. Now it needs to breathe. That breath comes from visionary tax policy—policy that says: “We don’t just want your money. We want your partnership.” Let’s make Ethiopia not just a country with a stock market—but a country where everyone has a stake in the future.