On January 31, 2022, the Federal Negarit Gazette of the Federal Democratic Republic of Ethiopia announced the establishment of the Ethiopian Investment Holdings (EIH) to serve as the country’s strategic investment arm. The fund will have an authorized capital of ETB 100 bn (US$ 1.9 bn at today’s exchange rate) and be seeded with over 43 public enterprises across different sectors, including Ethiopian Airlines, CBE and Ethio Telecom, as well as significant landholdings. We had the great pleasure of chatting with EIH’s CEO, Mr. Mamo Mihretu, and its Deputy CEO, Ms. Bilen Mammo, about the fund’s establishment and vision of the organization’s future.
[GSWF] What are the next steps in setting up EIH and when can we expect the fund to be up and running?
[EIH] EIH is the strategic investment arm of the Government of Ethiopia with three different mandates. The first is the pursuit of financing the national development plan and the creation of wealth for current and future generations. Second, changing the narrative around investment in Africa by becoming a world-class partner that de-risks investment. And finally, unlocking the commercial value of tangible and intangible assets by providing professional oversight and leveraging international best practices.
[GSWF] Timing seems to be challenging as the country fights a 17-month civil war and the impact of Covid-19. Why now?
[EIH] The idea did not just come overnight, and the establishment of EIH is a culmination of a long-term process. Ethiopia has embarked on home-grown economic reform and is making significant improvements in terms of macro, structural, and sectoral reforms.
[GSWF] What assets are expected to be transferred to the EIH? What segment/s of the economy will the fund focus on?
Public enterprises across different sectors, including transport and logistics (e.g., Ethiopian Airlines), energy, mining, manufacturing and financial services (e.g., CBE), construction, agriculture, telecom and media (e.g., Ethio Telecom), gaming, hotels and tourism.
Landholding: significant lands across the country are ready for investment.
[GSWF] At first, what will be the main strategy to create liquidity? Privatizations? Capital raising at fund level?
[EIH] Our efforts focus on seamless co-investment solutions that leverage partnerships. We also anticipate receiving dividends from subsidiaries, borrowing from the market, and gaining from proceeds of privatizations.
[GSWF] What role model/s are you looking at? What is your ideal partner to provide you with capital and/or co-investment?
[EIH] The strategic investment model was considered while establishing EIH, in order to promote development goals while generating a positive risk-adjusted return on allocations. We have looked at several strategic funds worldwide, including Temasek and Khazanah. We are looking to partner with institutional partners across the globe, e.g., we are currently discussing investment in a bulk liquid terminal to enhance connectivity and energy security in Djibouti and working with our partners to establish the Ethiopian Securities Exchange.
[GSWF] Is recruiting top domestic talent challenging? Are you targeting the diaspora to come back to Addis Ababa?
[EIH] The finance and development sectors are knowledge and talent-intensive. EIH focuses on talent development to recruit potential staff for the holding and its portfolio companies. We have developed our in-house EIH Circle of Excellence program and working with local and international talent agencies and individuals through our emerald (interns), amber (young professionals), and pearl (retirees) programs. We will be signing MoUs with pan-African institutions to mobilize talent across Africa and the diaspora.
[GSWF] Lastly, on a personal note, what has motivated you both to join the EIH project from the private sector and the World Bank? What ingredients do you think are needed for the long-term success of EIH?
[EIH] Ethiopia Investment Holdings is a pro-job, pro-growth vehicle that aims to lift the nation out of poverty. As young leaders, we are committed to that vision and strongly believe that talent development is the backbone of achieving greater heights for EIH.