Dr. Brook Taye, Chief Executive Officer of Ethiopian Investment Holdings (EIH), spoke at the European Chamber in Ethiopia’s CEO networking event on 23 January 2025, providing valuable insights into the role of EIH in Ethiopia’s economic development. As the country’s sovereign fund, EIH serves as the strategic investment arm of the Government of Ethiopia, overseeing and managing the nation’s state-owned enterprises. These include full ownership of state-owned enterprises such as Ethiopian Airlines, the Commercial Bank of Ethiopia, Ethio Telecom, the Ethiopian Insurance Corporation, Ethiopian Shipping Lines as well as minority stakes in joint ventures such as EIH having a 30% stake in AMCE, among others. EIH manages 14 portfolio subsidiaries on behalf of the government and holds six investments in its portfolio, with two more in the pipeline – the Ethiopian Securities Exchange and Toppan Gravity.

Dr Brook explained that, while several entities have historically managed state-owned enterprises in Ethiopia, what sets EIH apart is its role as an active owner. Unlike regulators, supervisors, or authorities overseeing the activities of entities, EIH positions itself as a hands-on investor and owner, actively engaging in the enterprises it manages.

The CEO emphasized that when dealing with underperforming companies, EIH adopts a proactive and constructive approach. Instead of waiting for board decisions or relying on guidance from other government entities, the organization takes the initiative to implement the necessary changes. This includes appointing new leadership, developing improved management strategies, and fostering conditions that drive better performance. “We set key performance indicators (KPIs) for all our state-owned enterprises and hold them to a standard of excellence,” Dr. Brook stated. “These KPIs naturally vary by sector, but the most critical common denominator is revenue. We review performance every quarter and adjust as needed if the strategy is not being executed effectively.”

From an investment standpoint, the CEO highlighted that EIH adopts a distinctive and forward-thinking approach, viewing investments and investors entering Ethiopia through a unique and progressive perspective. “We aim to be a reliable de-risking partner for investors entering the Ethiopian market. This involves taking full responsibility for managing the regulatory aspects of business operations, including land-related matters. Our goal is to allow investors to focus entirely on the business side of their ventures,” he said.

A recent review of EIH’s land assets showed that, by acreage, the holdings would make it the 30th smallest country in the world. This vast land ownership allows EIH to simplify the investment process for potential investors. “If an investor seeks 3,000 hectares of land for a project for instance, they no longer need to navigate various regions to find suitable land with the right agro-climatic conditions. Instead, EIH utilizes its comprehensive database to input specific parameters, identify the appropriate land, and ensure the investor can focus entirely on launching their business,” he noted. The CEO explained that EIH does not only contribute in-kind, but also invests equity. This structure allows EIH to support investors who typically bring in foreign exchange, while EIH handles the birr component, utilizing its own capital. The CEO emphasized that this is not debt financing, but rather equity investment.

EIH collects dividends from its 40 companies and contributes to Ethiopia’s national budget. “This year alone, we paid 5.3 billion birr in the first quarter. We are expected to contribute a total of 14 billion birr to the national budget, and whatever remains becomes our investment capital. We deploy this capital to ensure that companies entering the market have no difficulty accessing investment capital,” the CEO said. “We aim to be a de-risking partner for investors — whether through in-kind contributions or equity investments, we are here to support them when they seek investment,” the CEO assured European investors.

The CEO observed that for most companies entering Ethiopia, the biggest challenge is navigating the local legal landscape. Issues such as customs and interactions with various institutions often arise. However, with EIH’s strong board structure – comprising key figures such as H.E. the Prime Minister of Ethiopia, Dr. Abiy Ahmed, the Finance Minister, the State Minister of Finance, and other influential leaders in the government’s economic sector – Dr Brook reflected that issues are swiftly addressed.

According to the CEO, EIH has had a successful second quarter, marking a strong performance over the last six months. “EIH’s total revenue over the past six months amounts to 901 billion birr. We have generated nearly 5.1 billion dollars. We contributed almost 20 percent of the total taxes collected during this period. This performance reflects the results of our companies, driven by our active role as investors and owners, consistently pushing for excellence in performance,” he noted.

EIH has introduced a new strategy for its 40 companies, addressing legacy issues while focusing on the future. The five-year strategy centers around three key pillars – diversification, innovation, and public contribution. The first pillar emphasizes diversification in geography, services, products, and sectors. The second pillar encourages driving innovation and improving service delivery. The third pillar focuses on delivering value to the Ethiopian public through increased dividends, higher tax payments as revenue grows from diversification, and enhanced foreign exchange generation through expanded operations. The CEO highlighted that investment is at the core of EIH’s diversification and delivery strategy for the next five years, with opportunities for foreign investors to get involved.

The CEO provided an update on Ethio Telecom, noting that 10% of its equity is currently being sold, with the transaction period extended for another two weeks until mid-February. He emphasized that, for investors, more promising opportunities lie in what comes next. “Privatization is not EIH’s primary focus. Instead, the main priority is the reform of state-owned enterprises. As part of this reform, divestment will take place in certain areas. For example, the government has decided to divest 100% of the sugar estates, which are actively seeking investors. Meanwhile, companies such as the insurance, shipping, and printing firms are exploring the possibility of listing on the stock exchange,” he reflected.

The CEO also mentioned that the sugar estates are undergoing transformation, with even the older estates producing significant sugar for the local market. As part of the divestment strategy, all sugar estates are open for discussion with potential investors. He noted that foreign investors will be permitted to participate in the exchange market, with a quota of up to 30%. The capital market and the national bank are developing the necessary tools to facilitate foreign investment on the exchange.

The CEO expressed that EIH would be pleased to host discussions with investors on various aspects of the country and the policy issues at hand. As a commercial entity, he said EIH and its companies are focused on addressing key commercial concerns. “EIH is working to introduce a creative way of reducing the touchpoints of many logistics-related binding constraints using Ethiopian Shipping and Logistics and IPDC through the special economic zones. We plan to introduce this initiative in the next six months with a new working procedure.”

The CEO responded to questions raised by the business community during the event, which was attended by members of the European Chamber in Ethiopia, as well as representatives from the diplomatic community.