ECMA Clears Path for Mutual Funds, ETFs and Real Estate Funds
Ethiopia has established a formal regulatory framework for collective investment schemes after the Ministry of Justice registered and approved the Ethiopian Capital Market Authority’s (ECMA) Collective Investment Schemes Operation Directive No. 1150/2026 on September 23.
Issued under the Capital Market Proclamation No. 1248/2021, the directive sets rules for the establishment, registration, operation, and administration of collective investment schemes, while defining responsibilities for scheme operators, custodians, and other professional service providers.
The framework covers six categories of collective investment schemes:
| Scheme type | Description |
| Money Market Funds | Pool investor funds for investments in money-market and other short-term instruments |
| Mutual Funds | Professionally managed pooled investment portfolios |
| Real Estate Investment Funds | Investment vehicles focused on real-estate assets |
| Exchange-Traded Funds (ETFs) | Funds designed to be traded on an exchange |
| Alternative Investment Funds | Funds covering alternative investment strategies and assets |
| Special Designation Funds | Schemes established under specific designations permitted by the regulatory framework |
ECMA said no collective investment scheme can be offered to the public without registration by the Authority. This means the directive provides the legal foundation for such products, but individual schemes will still have to go through the regulatory registration process before they can be marketed to investors.
Independent custody and disclosure requirements
The directive also establishes structural safeguards around investor assets.
Scheme assets must be held by an independent custodian separate from the scheme operator, creating a separation between the institution managing a fund and the institution responsible for holding its assets. Registered schemes will also be subject to ongoing disclosure requirements.
Scheme operators and custodians are to be licensed under the existing Capital Market Service Providers Licensing and Supervision Directive No. 980/2024, while ECMA will supervise both registered schemes and their service providers.
ECMA Director General Hana Tehelku said the directive is intended to channel Ethiopian savings into productive investments through professional management and investor protection. She said the framework would broaden access to the capital market and create opportunities for the wider public to participate in economic growth.
A new route into the capital market
Collective investment schemes allow investors to pool their money into professionally managed portfolios rather than selecting and managing individual securities themselves. The new framework therefore creates a regulatory route for investment products that can potentially give households and institutions access to diversified portfolios.
The framework could also expand the range of products available through Ethiopia’s developing capital market. However, the pace at which this translates into actual investment products will depend on the licensing of operators and custodians, registration of individual schemes and the development of the professionals and infrastructure required to manage them.
Recent reporting has also highlighted capacity considerations, including the availability of qualified fund managers, custodians and valuation professionals.
ECMA said it will work with scheme operators, custodians, investors and other stakeholders as the collective investment market develops.
The directive marks another step in building the regulatory infrastructure for Ethiopia’s emerging capital market, moving collective investment products from a policy framework toward a regulated market structure.