Residing in a country with no capital market, an organised marketplace for trading securities and shares, Bereket Haile, 32, uses social media platforms to buy and sell shares, particularly banks. He finds they have a higher rate of return than most other sectors. Having a background in civil society work, he has over 22,000 network connections on Linkedin.

When the financial sector was flooded by new entrants rushing to join the banking industry, Bereket did not hesitate to react quickly. He had hoped to make a profit when the value of the shares appreciates. He acquired stakes in eight banks that were under establishment since the beginning of last year.

Bereket has a strategy, although constrained by his financial limitations, unlike equity investors where capital markets are developed. Bereket subscribes to the minimum amount of shares during the formation process and buys more once the bank starts operations. Luckily for Bereket, this strategy seems to be paying off. All but one of the eight banks he bought shares in have succeeded in meeting the central bank's upgraded minimum paid-up capital requirement.

One of the success stories is Rammis Bank, where Bereket bought shares a few weeks ago as part of the final round of sales. The Bank's promoters called a general assembly earlier this month, signalling their meeting all requirements. They were ready to join the industry with a paid-up capital of 724 million Br of the two billion Birr subscribed.

Says Bereket: “I was relieved.”

In March this year, in the aftermath of a series of directives introduced by the central bank, regulators declared all banks under formation would have a six-month window to raise half a billion Birr in paid-up capital. They are also required to increase their capital to five billion Birr in seven years, with five years allotted to the banks already in business.

Many of the 18 commercial banks welcomed the change, their executives being bullish about meeting the requirement.

Industry giants such as Awash, Dashen, the Cooperative Bank of Oromia, Hibret, and Nib banks had already surpassed the five billion Birr mark by the end of the third quarter of last year. Others like Abyssinia, Wegagen and Oromia International Bank are only a few million short. Some of the third-generation banks, including Addis International, Debub Global, and Enat banks, are in good shape to meet the requirement before the deadline. Though they have yet to attain half the required capital, their management teams are confident five years is ample time to do so.

The new entrants are trailing behind.

Promoters are frustrated, confronted with a myriad of troubles from the COVID-19 pandemic – an unexpected event that forced them to temporarily halt selling shares – to widespread instability and a full-blown war turning away prospective investors. This can be startling considering the appetite for investments in the financial sector, where shares can fetch as much as 40 times their par value during auctions.

Junedin Sado serves as a promoter for Sheger Bank, one of the hopefuls which have failed to meet the central bank's requirements. A former chief of the Oromia Regional State and Minister under Meles Zenawi's cabinet, Junedin returned from exile following the coming to office of Prime Minister Abiy Ahmed (PhD).

When he and his colleagues began approaching prospective investors, Junedin hoped to raise as much as one billion Birr. But materialising plans was anything but simple. They were not able to meet the half a billion Birr threshold, let alone making great strides. They have their reasons, though.

"Central bank officials don't listen to us, though we're facing a series of problems," Junedin told Fortune. "Although many in the diaspora pledged to invest 20 million dollars, they've changed their minds, uncertain about the situation in the country."

Neither is the revised law helpful in luring members of the diaspora. Although it created room for foreign citizens of Ethiopian origin to get involved in the financial sector, they can only buy shares in foreign currency but receive dividends in Birr.

Promoters of Ge'ez Bank blame these restrictions for failing to raise the equity before the deadline last week. Although they had expected to raise well over the required capital, 310 million Br in paid-up capital was raised thus far.

"The first thing members of the diaspora ask is whether dividends are paid in foreign currency," said Line Kinfe, marketing manager at Ge'ez.

The competition in the primary equity market is cutthroat. A flood of shares is available in the market. Dozens of banks, including those already in the market, have floated shares following the central bank's directive in March this year.

"It created fierce competition," says Line.

He has not given up yet. As the deadline approached, Ge'ez and several others filed a request with the regulators at the National Bank of Ethiopia (NBE), pleading for an extension. Their attempt was for nought, however. It was rejected outright.

Filed a month before the deadline, it was a request unlikely to receive a response in affirmative, according to Solomon Desta, vice governor of financial institutions at the central bank.

Promoters are less than pleased, blaming the central bank for foregoing consultations with them when the directive was first issued.

"We should have been consulted," said Junedin, whose Bank was gearing up to enter the industry with a focus on catering to the manufacturing sector.