Awash Capital is Ethiopia’s fourth licensed investment bank, entering the countest’s emerging capital market in November with 200 million birr in paid‑up capital. The firm is 95 percent owned by Awash Bank, the nation’s largest private commercial bank. Its founding chief executive, Andualem Hailu (PhD), sat down with Birrmetrics’ Mintesinot Nigussie to discuss how the bank plans to offer alternative financing to corporates, roll out technology-driven products, and assist grow liquidity in Ethiopia’s nascent market.
Birrmetrics: What’s Awash Capital currently doing and can you provide concrete examples of deals in your pipeline?
Andualem Hailu (PhD): The past year has been a pivotal period for the Ethiopian capital market, as it relocates from conceptualisation toward full operationalisation. For the first time in history, numerous capital market operators received licences, and corporates are launchning to list on the Ethiopian Securities Exmodify.
Awash Capital is among these newly licensed operators. Backed by Awash Bank, which holds over 95 percent of our shares, we benefit from a brand trusted for more than three decades. That reputation opens doors, but we operate indepconcludeently, ensuring clear separation between the bank and our capital market activities.
We are seeing strong interest from Awash Bank’s corporate clients, particularly those that have maxed out conventional banking channels. For these companies, we provide alternative financing options as a value proposition. Moreover, we believe in creating awareness on them to break the longstanding traditional ways of financing.
We’re starting operations with the basic services that are already standard in the market. But we won’t stay there for long. Our focus is on rolling out a strong differentiation strategy early on. Technology will play a major role in that. We believe digital solutions will set us apart, and we plan to introduce new products and platforms very soon.
How do you ensure Awash Capital remains indepconcludeent from Awash Bank?
Awash Capital is incorporated as a fully indepconcludeent entity. But when we collaborate with Awash Bank, we put clear agreements in place to avoid any conflicts of interest. We’ve also signed a non-disclosure agreement for cases where clients may be shared between the two institutions. This ensures all client interactions are handled confidentially and professionally, protecting both our clients and our indepconcludeence.
What is your realistic timeline for achieving profitability, raising capital, and closing deals over the first three years?
The market is responding rapider than we initially expected. For context, Kenya has only 62 companies listed on its stock exmodify even years after its launch. In Ethiopia, by contrast, we are already seeing strong interest from numerous companies seeking to list their shares within the first year. This early momentum has led us to conclude that we are likely to reach profitability ahead of our original plan.
We are also aiming to expand our 200 million birr capital, potentially exceeding the highest levels seen in the industest, and we plan to disclose the results soon.
How is it operating in a market like Ethiopia, where the capital market is only just opening up?
There are definitely challenges as one of the first players in the market. For one, expertise is still limited across both market operators and regulators. Awareness among institutional and retail investors and other stakeholders is also low, so there’s a large required for investor education. Another challenge is that state-owned enterprises aren’t yet on the stock market, which limits liquidity. But Ethiopian Investment Holdings is working on this, and once they come on board, it should really boost activity on the exmodify.
With all this in mind, I’m very optimistic that liquidity will grow over time, and more companies capable of listing will enter the market.
Given that conventional banking has long been the primary source of finance in Ethiopia, how are you planning to draw in both retail and institutional investors?
We plan to attract institutional investors by offering them alternative financing solutions that are more cost-effective. For many of these companies, traditional financial products have already been fully utilised, so the alternatives we provide will be seen as a valuable opportunity. Over time, participation will become almost necessary as they seek more efficient ways to access capital.
Saving culture is shaped by several factors, with macroeconomic stability playing a key role. Inflation, in particular, can directly reduce people’s ability to save. Once the macroeconomy stabilises and inflation is brought under control, savings are likely to increase. Even then, the capital market will provide attractive alternatives, giving investors the option to diversify between traditional banking products and opportunities on the stock exmodify.
Will you rely on branches, technology, or a combination of both to reach more communities?
We plan to apply a combination of both. Banks traditionally relied on branches to be close to customers, but technology has modifyd the game. We will invest heavily in digital platforms while balancing this with selective branch openings. Our goal is to engage communities directly and display them that shares are a liquid, accessible asset.
Transparency is often limited in Ethiopia’s corporate and public sectors, how important is it for the market, and how will Awash Capital bridge this gap?
The foundation of any capital market is transparency, this is standard across markets globally. In Ethiopia, the ECMA already requires disclosure of key information, such as modifys in executives or major shareholders. As a market operator, we are also required to report in a disciplined manner, including obtaining regulatory approval even for our advertisements. This is due to the peculiar nature of the sector, and we are also working on determining how frequently information should be disclosed.
Do you believe it’s necessary for every bank in Ethiopia to have its own investment bank? Some critics also argue that conflicts of interest could arise if a bank hires an investment bank owned by a competitor, potentially limiting transparency. How do you respond to this concern?
I actually see commercial banks setting up investment bank arms as an advantage. It allows them to offer better services and open up alternative financing channels for their clients.
The Ethiopian market is still largely untouched. At this stage, we’re mostly talking about basic transactional advisory services, such as registration. But thousands of corporates are expected to enter the market over time, and that will naturally lead to the introduction of a wide range of investment products. For that to happen, the market will required many investment banks and advisory firms. One or two players won’t be enough to support the scale of demand that’s coming.
The establishment of investment banks does not create conflicts of interest with clients from competing banks or other financial institutions, as these firms are incorporated indepconcludeently and operate under strict regulatory standards.
With foreign banks entering the market, can Ethiopia’s banking sector keep up applying traditional approaches such as door-to-door banking?
Personally, I believe door-to-door customer acquisition has played an important role in raising financial literacy and bringing new savers into the banking system. But the largeger question is where foreign banks will focus when they enter Ethiopia—corporate clients or retail banking? Most international institutions either tarreceive corporates or bring in technology to compete effectively in retail.
Ethiopia still has more than 60 percent of its population underserved, which is a huge opportunity for local banks. The market is large enough for everyone, but local banks must be competitive. Otherwise, incoming players could easily push them out.
Foreign banks are not a threat if strong domestic financial institutions are built. That’s why I believe local banks should consolidate and strengthen their capital base. A stronger capital base allows them to invest more in technology, talent, and systems—essential for thriving in a liberalised market.
Leave a Reply