Ethiopia’s capital market has cleared one of its most anticipated regulatory milestones after the Ministry of Justice today registered and approved the Collective Investment Schemes Operation Directive No. 1150/2026, the Ethiopian Capital Market Authority (ECMA) announced.

The directive, issued under the Capital Market Proclamation No. 1248/2021, sets out the legal framework for how collective investment schemes (CIS) are established, registered, operated and administered in Ethiopia. It also defines the duties of scheme operators, custodians and other professional parties involved in running pooled investment products.

For a market that has spent the past few years building its infrastructure piece by piece, from the Authority’s own establishment to licensing service providers and launching trading on the Ethiopian Securities Exchange, the CIS directive fills a gap market participants have long flagged. Without it, there was no legal route for the pooled, professionally managed products that allow ordinary savers to take part in the market without picking individual securities themselves.

“This Directive is a significant step in channelling the savings of Ethiopians into productive investment through professional management and strong investor protection,” said ECMA Director General Hana Tehelku. “It broadens access to the capital market and opens the way for the wider public to share in the country’s economic growth.”

Six scheme types

The directive recognises six categories of schemes: money market funds, mutual funds, real estate investment funds, exchange traded funds (ETFs), alternative investment funds, and special designation funds.

No scheme may be offered to the public without first being registered by the Authority. Scheme assets must be held by an independent custodian that is separate from the operator, a structural safeguard designed to protect investor money from operator misconduct or insolvency. Registered schemes will also be subject to ongoing disclosure requirements.

Operators and custodians will be licensed under the existing Capital Market Service Providers Licensing and Supervision Directive No. 980/2024, and ECMA will supervise both the registered schemes and their service providers.

Why it matters

The directive gives Ethiopian households and institutions an alternative to the traditional bank deposit, which has historically absorbed most of the country’s formal savings. Money market funds could offer a low-risk entry point for first-time investors, while mutual funds and ETFs open the door to diversified exposure to listed equities and government debt. Real estate investment funds, meanwhile, could give smaller investors access to a sector long dominated by direct ownership and large capital outlays.

For licensed investment banks and asset managers, the framework creates a new product line and a potential source of fee income, as well as a channel for steady demand in the securities market. Market observers will now watch how quickly operators move to register the first schemes, which products they prioritise, and how custodial capacity develops to meet the independence requirement.