Ethiopian Investment Holdings (EIH) was established in December 2021 with authorized capital of Birr 100 billion.
The Ethiopian Investment Holdings (EIH) was established in December 2021 with authorized capital of Birr 100 billion (about $1.9 billion) in which Birr 25 billion (about $480 million) is paid up in cash and kind.
The objectives of EIH are to:
- Serve as the strategic investment arm of the government of Ethiopia
- Promote sustainable development, and maximize the value of assets for current and future generations
- Provide a strategic vehicle to attract foreign investment
With the aim of replicating the models of Singapore’s Temasek and Malaysia’s Khazanah Nasional, EIH in its few months of existence has made some crucial strategic moves and recorded some notable milestones worthy of acknowledgement
Extraordinary and unprecedented growth in AUM
In less than two years of its establishment, EIH has grown its AUM from $1.9billion in December 2021 to about $45billion as of June 2023. This extraordinary speed of growth in AUM is unprecedented, not just in Africa, but across the globe. The strategy used by the government of Ethiopia has been to transfer a vast swathe of strategic state assets to EIH to oversee and manage under its holding structure. Its asset base is made up of over 40 public companies and institutions across all sectors of the economy, including the Commercial Bank of Ethiopia, Ethiopian Airlines, and Ethio Telecom. It is the combined valuation of these diverse strategic assets that explains the overnight transformation of EIH into Africa’s second largest SWF. With its $45billion AUM, EIH has a portfolio that is roughly 45% of Ethiopia’s GDP (approximately $100billion)
Without a doubt, EIH has broken new ground in terms of how other African countries may also grow the size of their sovereign wealth funds. To emulate this approach however, requires real political will and foresight.
Strategic partnerships
Since 2022, EIH has pursued strategic partnerships in line with its domestic and international strategy.
- It signed an MOU with Djibouti’s Ports & Free Zones Authority (through the Great Horn Investment Holdings) to co-invest in the development of a new storage terminal in Djibouti Damerjog Industrial Park.
- EIH has joined the International Forum of Sovereign Wealth Funds (IFSWF) and undertaken to uphold international best practices and the Santiago Principles
- EIH has signed a cooperation agreement with the Ethiopian Ministry of Finance and FSD Africa to establish the Ethiopian Securities Exchange (ESX)
Despite being a relatively young fund, the degree of momentum and tenacity to adopt international best practices, take advantage of investment opportunities both domestically and regionally, and actively engage in collaborations for co-investments, among others is outstanding.