Gadaa Bank is set to launch a securities dealer share company with an initial investment of 80 million Br, receiving a trade license from the Ministry of Trade & Regional Integration (MTRI) on July 25, 2025 and is awaiting regulatory nod.

The new entity, 75pc owned by Gadaa Bank, will also bring together institutional shareholders including Tiger General Trading Plc (10pc), Oromia Insurance, Wada Engineering Plc, Godu General Trading S.C., and one individual investor (each with 3.75pc).

If launched it'll only be the second firm to formally venture into the regulated securities dealing business, after Ethio-Fidelity Securities S.C., which secured its license in March 2025. Founded by investors with backgrounds in finance and technology, Ethio-Fidelity set a precedent as the first independently licensed securities dealer.

“We’re in the final stages of fulfilling all formalities with the regulator,” said Wolde Bulto, president of Gadaa Bank, who also chairs the new subsidiary’s board.

“Registration isn’t automatic.” Hana Tehelku Director General Ethiopian Capital Market Authority (ECMA)

Gadaa Bank has formed a five-member board for its new subsidiary, selecting members from its new shareholder base. Although nominees for CEO and compliance officer have not yet been made public, the Bank is finalising the required filings with the ECMA, whose Director General, Hana Tehelku, confirmed the regulatory gatekeeping process remains rigorous but open.

Gadaa Bank’s push into investment banking signals that the regulatory and infrastructural groundwork for capital markets is beginning to take form. Its intent seems clear in capturing early-mover advantage as the Ethiopian Securities Exchange (ESX) gradually gains traction.

By establishing a legally distinct investment arm, Gadaa is set to comply with ECMA’s licensing requirements, which mandate banks to separate their capital market operations.

This comes at a time when Prime Minister Abiy Ahmed’s (PhD) Administration is undertaking unprecedented financial sector reforms, including the opening up of capital markets, central depository systems, and digital trading platforms.

However, while momentum is building, uncertainty still looms over the commercial viability of securities dealing. The capital market remains underdeveloped, with only a handful of companies listed and a still-nascent investor base.

The timing of the announcement coincides with Gadaa Bank’s release of encouraging financials. The Bank posted a profit of 247.2 million Br by the end of December 2024, reversing a net loss of 84.3 million Br in its first year, 2023.

In its most recent fiscal year, Gadaa Bank generated 1.6 billion Br in total income, up 106pc, while keeping cost growth at 75pc and its total assets exceeding 10 billion Br. Loans increased by 51pc to over three billion Birr, while deposits climbed to seven billion Birr. Incorporated in December 2022 by 28,000 shareholders, its paid-up capital also surged by half a billion Birr to 1.8 billion Br, indicating strong balance sheet growth, but far from even halving the five billion Birr capital threshold the Central Bank set for banks by July 2026.

The performance has likely emboldened the Bank’s leadership to diversify into higher-margin investment banking services, including brokerage, advisory, and securities trading. In June 2024, Gadaa Bank became the second financial institution to list on the ESX through an “introduction,” floating 1.2 million shares. Each share, valued at 1,000 Br, gave over 30,000 shareholders access to liquidity and the growing public market.