Ethiopia Investment Holding (EIH) has been in existence for less than a year, but is already taking great strides in co-investments to develop the domestic economy.
The US$39 billion strategic sovereign wealth fund, which was launched in May 2022, has launched plans to establish the Ethiopian Stock Exchange (ESX) and today it signed a deal with UAE Emirates renewable energy company Masdar – part-owned by Abu Dhabi SWF Mubadala – for the joint development of a 500MW solar project.
The ESX is expected to launch in 2024-25 with 50 listed companies, with the potential to become a capital markets hub. Ahead of the launch, Ethiopia will need to upgrade its internet and cell phone capabilities as well as ensure market transparency and protect investors' rights through a robust regulatory system. In May, EIH signed a Cooperation Agreement with FSD Africa to establish the ESX, a key market institution that will provide Ethiopian entrepreneurs and businesses with access to long term finance.
The ESX may provide EIH opportunities for listing of assets, a common strategy of SWFs seeking to attract investment in their portfolio through capital markets while also boosting market capitalization and liquidity potential of the local bourse. EIH has indicated it is open to privatization of its portfolio companies, following restructuring under its auspices.
The solar facility would increase national electricity generating capacity by 10% to 5.4GW, but the costs were not revealed. It would represent the biggest solar investment in Africa by the US$20 billion Abu Dhabi renewables investor, which was launched by Mubadala in 2006.
The deal is in line with EIH’s strategy of forging partnerships. In June, EIH’s CEO Mamo Mihretu told Global SWF, “Our efforts focus on seamless co-investment solutions that leverage partnerships. We are looking to partner with institutional partners across the globe.”
The Ethiopia initiative was announced at the same time as Zambia's state-owned power utility Zesco signed an agreement with Masdar to develop solar projects worth US$2 billion, starting with the phased installation of 500MW and eventually reaching 2GW. The simultaneous deals indicate that the Mubadala affiliate is pressing hard into African solar and past experience suggests it will follow up the projects with rural connectivity projects.
Masdar already has a solid track record in the development of African solar energy generation, notably in Egypt where it established a 10MW photovoltaic power plant in Siwa in 2015. In 2016, it completed four solar PV plants in Egypt’s Red Sea Governorate with total capacity of 14MW and has also rolled out standalone solar home systems in rural communities and small solar plants in the massive, sparsely populated Al Wadi Al Jadeed governate. Elsewhere in Africa, Masdar developed the Sheikh Zayed Solar Power Plant, a 15MW photovoltaic facility in Nouakchott, Mauritania and also installed an additional 16.6MW of photovoltaic projects in eight remote communities in Mauritania in 2016.