Ethiopia may be the second-largest economy in the world after Angola without a stock exchange and there are no plans for one in the coming five years, Charlie Robertson, Global Chief Economist at Renaissance Capital has said.

He added however, that there is room for Ethiopia to attract foreign capital, for example by listing the local company on the foreign exchange such as the London Stock Exchange.

“If the country needs more finance to boost growth – then listing its telecom company or airline on an international stock market – could be an alternative to increasing its external debt,” he said.

“The monopoly position of the state owned telco and airline could make these interesting to international investors. It would raise Ethiopia’s global profile – in a similar manner to the debut Eurobond issue of 2014,” he added.

Ethiopia has had impressive success with the economic policies, achieving the seventh best growth rates over 2000-2015 of any country in the world (the top six were China, Myanmar and four oil/gas exporters).

Robertson noted that Ethiopia has achieved this without portfolio investors playing any role until the debut Eurobond in late 2014.

Ethiopia’s government has used domestic resources to fund growth rather than seek foreign portfolio investment.

So rather than IPO telecoms as Kenya did, the government has used profits from the state-owned telecom monopoly to fund investment in infrastructure.

“We do not see any sign of an opening up to foreign portfolio investors or foreign banks, but we believe that the country could attract such investment (without undermining its ideological beliefs) via listing companies offshore,” he added.

Robertson compared Ethiopia to “China in 1983”.

“China is probably the best comparison for those looking at Ethiopia. Both countries have an extremely long history of relatively stable government. It is striking to us how well the Ethiopian government has managed to deliver on its objectives,” he said.

Renaissance Capital estimates the development lag between Ethiopia and China at 25 years.

Robertson said that China saw corporate bonds and some company stocks re-emerge in 1984, but it only re-established its stock market in 1990.

“That means we should expect a corporate bond market [in Ethiopia] to open up this year (this is planned) and a stock market should come by 2023,” he said.

In one marked contrast to the China or East Asian model, Ethiopia maintains an overvalued currency via extremely strong capital controls.

Hence, Robertson warned that Eurobond investors need to be aware that the currency is overvalued but that the IMF still only sees a medium risk of the country facing a debt distress scenario in the medium term.

“In the meantime, we believe equity investors will need to consider private equity as the most plausible way to access this market,” he added.