Ethiopian Investment On-boards its Subsidiaries.How nations manage their resources is one of the key determinants on whether they succeed or fail in the path to wealth creation. While debating on key policy matters, policymakers tend to over-emphasize public debt and overlook the value of public assets. Globally, public assets are by far larger than public debts worth at least twice the global GDP.
Furthermore, public assets that are well-managed on average, add three percent of GDP as additional revenue to the govemment budget (IMF). Countries around the globe establish either sovereign or public wealth funds to manage their public assets and pass on wealth to the future generation. These institutions serve as catalysts for prosperity as they can unlock the value of public assets.
Recognizing that Ethiopia’s assets are far greater than the county’s liabilities, Ethiopian Investment Holdings is established to build on previously successful public asset reform initiatives and accomplish three main objectives.
These objectives are:to serve as a strategic investment arm of the govemment: to contribute to sustainable economic development of the country, through professional management of its funds and assets by following international best practices and corporate governance principles;to provide a strategic vehicle to attract foreign investment by, among others, establishing a coinvestment platform, consolidating assets for further monetization, unlocking values from current unutilized assets, and thereby bringing the highest possible return on investment.
The establishment of sovereign or public wealth funds in Ethiopia and other African countries plays a pivotal role in correcting the narrative that labeled the continent as exotic, risky, and aid-dependent. These funds play a pivotal role in using capital strategically to establish industrial development in several sectors to create inclusive economic opportunities for its vibrant and young population.
These funds can also help attract large scale anchor investors by creating co-investment platforms to mitigate risks in key sectors of the economy where conventional investment incentives such as income tax exemption, customs tax exemption, and land facilitation may not be sufficient to attract large-scale investments. Additionally, they provide the legal basis for the government to move away from a regulatory role to an active owner where it can optimize public assets by instilling the principles of good governance, professional management, and prudent investment practices.
To officially launch operations and with the aim of laying a strong foundation for collaboration with its subsidiaries, the Ethiopian Investment Holdings launched a two-day on-boarding summit to be held on June 23 and 24h 2022.
The main objectives of the Summit are to highlight international good practices of corporate governance and portfolio management by holding companies: align expectations with subsidiaries on topics such as transparency and disclosure, talent and organizational development, commercial discipline and value creation: and assert the importance of mobilizing investment into and with state-owned commercial companies.
The summit will bring together prominent global experts, CEOs and board chairs of subsidiary companies, and representatives of partner institutions. The summit will offer keynote speeches, presentations, panel discussions.and smaller group interactions to allow for exchange of ideas at multiple levels.
