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PH:DR: “Understanding credit rating and green, social and sustainable financing opportunities in Ethiopia”
The United Nations Economic Commission for Africa (ECA) and FSD Ethiopia, in collaboration with the Ethiopian Securities Exchange (ESX) and the Ethiopian Capital Market Authority (ECMA), organized a two-day workshop on the theme “Understanding Credit Rating and Green, Social and Sustainable Financing Opportunities in Ethiopia”. This workshop is part of the support that the two organizations provide to Ethiopia for the establishment of its first securities exchange.
The new securities exchange will allow market participants to raise funds, so it is essential to understand the credit rating process, as it is one of the main tools used to assess the creditworthiness of debt issuers . Therefore, the main objective of this workshop is to strengthen the credit rating capacities of Ethiopian financial institutions, regulators and professionals for better participation in the ESX.
Mr. Brook Taye, Director General of the Ethiopian Capital Market Authority (ECMA), welcomed the initiative of the organizers, emphasizing the importance of the subject and the need to have ratings that reflect the economic potential of the African continent and which are based on a good understanding of African dynamics.
Along the same lines, Dr. Tilahun Kassahun and Mr. Michael Habte, respectively Managing Director and Chief Operating Officer of ESX, highlighted the need for quantitative credit analysis, as well as appreciation of the local context. , i.e. qualitative analysis on the ground and engagement with company management. Mr. Habte emphasized the value of independent ratings, stating that “ratings serve as a barometer not only for individual companies, but also for sectors. They should be forward-looking by nature.”
Ms. Sonia Essobmadje, Head of the Innovative Finance and Capital Markets Section (IFCMS) of the ECA, highlighted that credit rating is an important factor for the development of capital markets, as it provides a standardized and objective assessment of the credit risk of different issuers and securities. It helps investors compare the risks and returns of different investment options and make informed decisions about the allocation of their capital. Credit rating also influences market prices and yields on bonds and other debt instruments, as well as the availability and cost of credit to borrowers.
Mr. Ikechukwu G. Iheagwam, Associate Director at Agusto & Co facilitated the workshop, while Mr. Fassil Gebretsadik, FSD Ethiopia, moderated the workshop. During the two days, various aspects were covered such as the presentation of the different types of credit rating and associated methodologies, the credit rating process and its implications for issuers and investors, as well as green financing opportunities. and durable. Case studies were also discussed with the participants. The workshop was enriched by presentations from ECMA on credit rating regulations in Ethiopia, a presentation from ESX on the stock exchange’s product offering as well as a presentation from CEA on its research, training programs and technical support to countries in the area of credit scoring.
Over 70 representatives from the Ethiopian Capital Market Authority, Ethiopian Stock Exchange, FSD Ethiopia, financial institutions and intermediaries participated in the workshop, which was held in a hybrid format.
The collaboration between ECA, FSD Ethiopia, ECMA and ESX represents a crucial step in establishing a resilient credit rating framework in Ethiopia. By fostering expertise and cooperation, this initiative aims to build the foundations of a thriving financial sector, capable of effectively supporting economic growth and development.
