INSIDE ETHIOPIA’S CAPITAL MARKET CRACKDOWN: HIGH-PROFILE INVESTIGATION TARGETS ALLEGED UNLICENSED SECURITIES OPERATIONS

By E Frashie, Investigative Reporter
Ethiopian Tribune | May 14, 2025

ADDIS ABABA — In what may signal a watershed moment for Ethiopia’s emerging financial sector, the Ethiopian Capital Market Authority (ECMA) has launched a sweeping investigation into suspected illegal fundraising activities that has ensnared one of the country’s most prominent businessmen.

The Tribune has learned that Ermias Amelga, a well-known entrepreneur with extensive business interests, and Genesis Investment Services PLC are among those under investigation for allegedly conducting securities offerings without proper licensing, potentially violating newly established capital market regulations.

“This investigation represents our commitment to establishing a transparent, fair, and accountable capital market in Ethiopia,” said Fikadu Digafe, Chief Executive Officer of ECMA, in an exclusive interview with the ET. “No individual or entity, regardless of prominence or connections, is above the regulatory framework designed to protect Ethiopian investors.”

The Investigation

The investigation, confirmed in an official statement released Thursday, follows months of whispers in financial circles about aggressive fundraising activities that appeared to skirt regulatory oversight. Sources close to the matter, speaking on condition of anonymity due to the sensitivity of the ongoing investigation, revealed that the probe was triggered by multiple complaints from investors who questioned the legal status of certain investment schemes.

“We’ve been tracking unusual investment solicitations for some time,” explained a senior ECMA official who requested anonymity due to not being authorised to speak publicly about the investigation. “The patterns suggested organised fundraising activities operating outside our regulatory framework.”

Documents reviewed by the Ethiopian Tribune indicate that the alleged unauthorised securities offerings may have raised millions of dollars from hundreds of investors, many of whom may have been unaware of the licensing status of the entities involved.

High-Profile Target

Ermias Amelga’s inclusion in the investigation has sent shockwaves through Ethiopia’s business community. As the founder of multiple companies including Access Capital and founder of the pioneering Zemen Bank, Amelga has long been considered a visionary entrepreneur in Ethiopia’s developing private sector.

“Mr. Amelga’s involvement makes this case particularly significant,” noted Dr. Yared Hailemeskel, professor of financial law at Addis Ababa University. “His extensive network and reputation potentially gave these investment opportunities credibility that others might not have enjoyed.”

Repeated attempts by the Ethiopian Tribune to reach Amelga for comment were unsuccessful. Representatives from Genesis Investment Services PLC declined to comment, citing the ongoing investigation.

Multi-Agency Task Force

ECMA’s investigation is not proceeding in isolation. The authority has established a specialised investigative unit working in coordination with a high-level technical task force that includes representatives from:

• Ministry of Trade & Regional Integration
• Financial Intelligence Services
• Ministry of Justice
• Federal Police Commission

This unprecedented level of interagency coordination underscores the seriousness with which authorities are treating potential violations of capital market regulations, which were only recently established as part of Ethiopia’s broader economic reform agenda.

“The composition of this task force suggests authorities are examining potential violations beyond just securities regulations,” explained Abebe Shiferaw, a former prosecutor now working as a financial crimes consultant. “When you see Financial Intelligence Services involved, they’re likely looking at money flows and potential financial reporting violations as well.”

Investor Protection Focus

ECMA officials emphasised that the investigation is being conducted with full respect for constitutional protections and due process. “The right to be heard and legal protections guaranteed by law are being strictly observed,” the authority stated in its release.

The investigation comes at a critical juncture for Ethiopia’s capital markets, which are still in their infancy following decades of state-dominated economic policy. The government has identified capital market development as a key pillar of its economic reform agenda, aimed at mobilising domestic resources for investment and reducing dependency on foreign debt.

“A functional capital market requires trust,” explained Bethlehem Tilahun, an investment advisor with East African Capital Partners. “If the public perceives the market as unregulated or risky, they’ll keep their money under mattresses or in real estate instead of productive investments that could drive economic growth.”

Public Warning

ECMA has issued a clear warning to the public, urging potential investors to verify the licensing status of any investment opportunity directly with the Authority before signing contracts or transferring funds.

“We strongly advise all Ethiopians to conduct proper due diligence,” said Fikadu. “This includes checking with commercial registration offices to ensure compliance when forming business relationships.”

The authority has established a dedicated hotline for the public to verify licensing information and report suspicious investment offerings.

Broader Implications

Financial analysts suggest this investigation could represent a turning point for Ethiopia’s financial sector regulation.

“This is the first high-profile capital markets enforcement action we’ve seen,” noted Hanna Gebremariam, managing partner at Addis Financial Advisory. “How it’s handled will establish important precedents for the regulator’s independence and effectiveness.”

The investigation occurs against the backdrop of Ethiopia’s ambitious economic reform agenda, which aims to transition the country from a state-controlled economy to one with greater private sector participation. Effective regulation of capital markets is considered essential to this transition.

“For Ethiopia to realise its economic potential, we need well-functioning capital markets,” said Dr. Hailemeskel. “That requires both encouraging investment and ensuring robust investor protection. This investigation suggests authorities are serious about both sides of that equation.”

As the investigation unfolds, it will likely test not only the regulatory framework but also the judiciary’s capacity to handle complex financial cases. The outcome could determine whether Ethiopia’s emerging capital markets develop with the transparency and accountability necessary to attract both domestic and international investment.

Further developments in this case will be covered by the Ethiopian Tribune as they emerge.

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