In a recent interview on the Ethiopia in Focus program with Billene Seyoum, Dr. Brook Taye discussed key initiatives being undertaken by Ethiopian Investment Holdings and shared insights on its future outlook.
Ethiopia is undergoing a significant economic transformation, spearheaded by its newly launched Sovereign Wealth Fund, Ethiopian Investment Holdings (EIH). Dr. Brook Taye, CEO of EIH, describes it as the government’s strategic investment arm, overseeing a vast portfolio of over 40 projects across diverse sectors. This isn’t just about managing state-owned enterprises (SOEs); it’s about driving industrialization, creating jobs, developing infrastructure, and attracting both domestic and foreign investments.
“We are in every part and parcel of Ethiopian life, that’s why we need to manage them efficiently,” says Dr. Brook Taye, highlighting the pervasive influence of EIH’s portfolio companies.
A Shift in Management Philosophy
The establishment of EIH marks a major shift in how Ethiopia manages its state-owned assets. In the past, these enterprises were often seen as policy instruments or means to address market failures. Dr. Brook Taye emphasizes a new commercial approach:
“The first success for EIH, or the change in terms of the government view, is that these assets need to be managed commercially. They’re not a policy instrument.”.
This means focusing on profitability, transparency, and corporate governance, aiming to replicate the success of Ethiopian Airlines across all sectors. This change includes actively managing these companies, defining broader strategies, and ensuring transparency from the CEO to the board.
Strategic Investments and Diversification
EIH’s role goes beyond managing existing SOEs; it’s also about making strategic investments that directly benefit Ethiopia’s economy and its people. A prime example is the investment in a local passport printing facility, addressing a critical supply issue that arose during the COVID-19 pandemic.
Dr. Brook Taye explains, “What we’ve learned is that if you don’t produce the things that you need in your country, price would not matter it becomes an issue of availability”.
This bold move demonstrates the fund’s commitment to self-reliance. Furthermore, EIH is also diversifying its portfolio by acquiring shares in an internationally traded company on the Paris exchange. This move is not only about diversifying, but about motivating Ethiopian businesses to look outward and expand.
“This is part of our strategy to diversify in many different sectors, and second, we want to motivate not only our SOEs but other Ethiopians as well to look outwards to invest,” notes Dr. Brook Taye.
Key Sectors and Their Impact
EIH’s reach spans almost every sector of the Ethiopian economy. These include:
- Logistics and Connectivity: Ethiopian Shipping Lines and Ethiopian Airlines
- Finance: Commercial Bank of Ethiopia and Ethiopian Insurance Corporation
- Hospitality: Hilton, Goha, and Genet Hotels, as well as spa services
- Manufacturing: Chemical and sugar industries
- Everyday Services: From electricity to mobile and online payments
Dr. Brook Taye notes, “When you wake up in the morning, you either turn on your light or you turn on your phone – both are provided highly likely by companies that are under Ethiopian Investment Holdings,” emphasizing the fund’s deep integration into daily life.
This broad reach underscores the importance of efficient and commercially-driven management of these enterprises.
A Vision for Growth: Diversification, Economic Drive, and Delivery
EIH has a clear long-term vision outlined in three main components: diversification, driving economic growth, and delivering results. Diversification involves expanding products, services, and geographic reach beyond Ethiopia. EIH expects its SOEs to be at the forefront of driving economic growth, which is already evident with recent dividend payments to the government.
Dr. Brook Taye emphasizes: “We need to drive economic growth; our SOEs should be the driving force when it comes to economic growth“.
EIH also aims to increase foreign currency generation through exports. He states that, “just last quarter…ethiopian ship lines generated $147 million, Ethio Telecom $72 million”, indicating the significant impact of this strategy.
Partnerships, Joint Ventures, and De-risking
EIH is actively seeking partnerships and joint ventures, positioning itself as a “de-risking partner” for foreign investors.
“If you have ever any doubt trying to come to Ethiopia and you don’t know the lay of the land, let us be your de-risking partner”, says Dr. Brook Taye, inviting potential investors to collaborate.
EIH offers support in land acquisition, electricity connections, and navigating regulatory issues. This approach has proven effective, attracting companies, like an EV bike company, who are now focusing on their core business without dealing with logistical hurdles. EIH is also open to equity partnerships, utilizing its strong financial position to invest in promising ventures.
The Ethiopian Securities Exchange (ESX)
The introduction of the Ethiopian Securities Exchange (ESX) is another key component of Ethiopia’s economic reform. The listing of 10% of Ethio Telecom’s shares on the ESX marks a major milestone, allowing for strategic divestment, and providing companies with an alternative to bank financing for raising capital.
Dr. Brook Taye explains, “We started the Capital Market process by offering 10% of Ethio Telecom’s share…that’s a major step departure”.
This move enables the government to strategically divest assets and allows SOEs to raise capital through the market.
Attracting Foreign Capital and the Startup Ecosystem
Ethiopia’s strategic location, competitive labor market, and diverse agro-climates make it an attractive destination for foreign investors. The country’s large and growing consumer base, with 70% of the population under 30, is another significant advantage.
Dr. Brook Taye challenges the outdated perceptions of Ethiopia, emphasizing that, “This is not the 1980s; this is a new Ethiopia with a much better opportunity in terms of investment.”. He also highlights the emerging startup ecosystem, supported by new legislation and incentives for both local and foreign startups. “We’re introducing a new startup proclamation, one of the most adventurous startup proclamations,” says Dr. Brook Taye, underscoring the government’s commitment to innovation.
Opportunities for Youth and Innovation
EIH is also focused on supporting young entrepreneurs through a “fund of funds” strategy, allocating significant resources to invest in startups. Furthermore, EIH is encouraging its portfolio companies to collaborate with and adopt innovative solutions from young, dynamic individuals.
Dr. Brook Taye notes, “For people who are involved in innovative ideas, creative ideas, or in the startup world, we’re creating a fund of funds…we’ll be with you”.
A Consolidated View of Ethiopia’s Assets
Dr. Taye emphasizes the importance of a consolidated financial report to demonstrate Ethiopia’s wealth, which often goes unacknowledged. He points out that, ” We always talk about our debt…but nobody calculated how much each of us worth…we are much richer in terms of real physical asset“. He concludes that Ethiopia is preserving its assets and building a stronger future for generations to come.
The reforms and strategies being implemented by the Ethiopian government, with EIH at its center, signify a new era of economic growth and opportunity. With a focus on commercial management, strategic investments, and a commitment to innovation, Ethiopia is positioning itself as a major player in the African economy and beyond.
