The Ethiopian Capital Market Authority has finalized a directive on Collective Investment Schemes, a development expected to broaden access to investment and support the growth of the country’s emerging capital market.

The directive has been submitted to the Ministry of Justice for final legal review and registration. Once approved, it will establish the regulatory framework for mutual funds, unit trusts, money market funds, and real estate investment funds.

The new framework is expected to make it easier for ordinary Ethiopians to participate in investment opportunities that were previously concentrated in the hands of wealthy individuals and large institutions. Licensed fund managers will be able to pool contributions from multiple investors and allocate them across diversified assets, including government bonds, corporate debt securities, money market instruments, and large real estate projects.

The directive also introduces real estate investment funds, a structure expected to open major property developments to a wider pool of investors while giving developers access to new sources of capital. In addition, money market funds are expected to provide savers with a more flexible alternative to traditional bank deposits.

According to the authority, the draft is now at the final stage of the legislative process. Once registration is completed, licensing of collective investment scheme operators will begin. The authority says several domestic and foreign institutions have already expressed interest in entering the market as licensed fund managers.

The move comes as the regulator increases enforcement against unregistered investment activity. Officials say the directive will help create a lawful and transparent investment route while improving the identification of fraudulent schemes operating outside the regulatory framework in Ethiopia.

Source: Capital Ethiopia Newspaper