Ethiopia’s Council of Ministers approved the establishment of Ethiopian Investment Holdings – Ethiopia’s Sovereign Wealth Fund on December 29, 2021. It is learned that the fund aimed at attracting investment for at least $150bn worth of state-owned companies and assets. Ethiopia has more than 40 state-owned enterprises.
Below, we highlighted 7 Things You Might Want to Know About Ethiopian Investment Holdings based on Regulation No. 487/2022.
- Ethiopian Investment Holdings’ objectives are to serve as the government of Ethiopia’s strategic investment arm, to contribute to long-term economic development by professionally managing its funds and assets to achieve optimal use in accordance with international best practice and corporate governance principles, and to provide a strategic vehicle to attract foreign investment. E.g., establishing a co-investment platform and consolidating assets for further monetization.
- Ethiopian Investment Holdings’ authorized capital is Birr 100 billion, of which Birr 25 billion is paid up in cash and in-kind.
- Regardless of the government’s investment ratio, Ethiopian Investment Holdings, as well as sub-funds and firms established by Ethiopian Investment Holdings or in which it participates in the establishment, are considered as private business organizations.
- The ownership of the country’s state-owned firm or any other state-owned asset shall be transferred to Ethiopian Investment Holdings upon the request of the EIH CEO and with the permission of the Board of Directors.
- One of EIH’s responsibilities is to participate in the capital market, money market, and other related sectors by acquisition, sale, or other investing endeavors.
- Beyond its overall assets, Ethiopian Investment Holdings will not be accountable. Dividends of Ethiopian Investment Holdings from its organizations are exempt from all taxes, duties, and similar charges. However, sub-funds and corporations in which Ethiopian Investment Holdings is a shareholder are not eligible for such exemptions.
- Ethiopian Investment Holdings will be governed by the following structure: a Board of Directors; a Chief Executive Officer and Executive Management; necessary staff; and, whenever necessary, an Independent International Advisory Board.
“The establishment of EIH is a strong testament that the government’s economic reform agenda for growth and resilience is well on track,” Mamo Mihretu, the fund’s founding chief executive, told to the Financial Times.
Ethiopia’s economy grew at near double-digit rates for the best part of two decades. However, the IMF said in its latest forecast that it expanded only 2 percent last year, and it omitted growth projections for 2022 “due to an unusually high degree of uncertainty”.
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