Government investment wings are specialized agencies or funds established to oversee the public investment portfolio, attract foreign investments, and promote economic development. They function as strategic investment arms of the government, directing public funds towards specific projects or sectors to accomplish policy objectives, drive economic growth, and secure financial gains. Typically, these entities are engaged in infrastructure development, strategic industries, and international investment partnerships.
The Ethiopian Investment Holdings (EIH) is established as the strategic investment arm of the Government of Ethiopia in December 2021 based on Proclamation No. 1263/2021. EIH’s primary objectives include:
- contributing to sustainable economic development through professional management of its funds and assets achieving the optimal use thereof in accordance with international best practice and corporate governance principles and to maximize the value for the benefit of current and future
- serving as a strategic investment arm of the government of Ethiopia; and
- providing a strategic vehicle to attract foreign investment by, among others, establishing a co-investment platform, consolidating assets for further monetization, unlocking value from current unutilized assets and bringing the highest possible return on investment.
EIH is designed to maximize the investment potential of state-owned assets through professional management and strategic oversight, including establishing subsidiaries, overseeing capital decisions, engaging in restructuring, and forming partnerships with both local and foreign investors. EIH has the mandate to:
- partner with local or foreign investors
- takeover and manage state-owned assets assigned by the government
- establish subsidiaries
- decide on subsidiaries’ increase or reduction of capital
- decide on subsidiaries’ sale, amalgamation, division, spin-off, or other restructuring
- establish sub-funds or acquire shares in existing entities or funds
- perform other activities to achieve its objectives
Complementing this, Regulation No. 487/2022 further elaborates the role of EIH, stating its accountability to the PM Office and reinforcing its classification as a private business organization. This regulation allows EIH and its subsidiaries to function independently, thereby encouraging greater participation from private investors in state-owned enterprises (SOEs) and other assets.
EIH serves as a conduit for investment by attracting foreign capital and managing state assets to contribute to Ethiopia’s sustainable economic development. Through the establishment of co-investment platforms, EIH consolidates and monetizes underutilized assets, offering opportunities for higher returns on investments. Its responsibilities include establishing sub-funds, taking part in capital markets, and managing the transformation of state-owned assets into revenue-generating ventures.
Recent legal reforms and investment opportunities
The enactment of the Public Enterprises Law Proclamation No. 1314/2024 also introduces significant changes for public enterprises/SOEs in Ethiopia. This law aims to enhance the autonomy and financial transparency of SOEs, facilitating their transformation into competitive entities. It introduces the concept of a State Holding Company, tasked with overseeing SOEs, ensuring compliance with corporate governance standards, and fostering a conducive environment for privatization.
This new legal framework creates a robust environment for private-sector participation by clarifying the definition of SOEs and ensuring competitive neutrality. This is vital for investors, as it levels the playing field by eliminating state-owned advantages, such as preferential regulatory treatment. Additionally, the law provides a transparent framework for the partial or full privatization of SOEs, opening the door for investors to acquire stakes in key sectors of the Ethiopian economy.
As EIH focuses on managing and optimizing SOEs and other government assets, it attempts to establish an environment where state resources are effectively utilized to generate returns. This, together with the newly enacted Public Enterprises Proclamation and the existing PPP framework, offers potential opportunities for investors by promoting stability, transparency, and strategic collaboration.
The Public Enterprises Proclamation introduces corporate governance standards intended to reduce financial and operational risks associated with investments in state- owned assets. This framework, which emphasizes transparency and accountability, could contribute to greater investor confidence, particularly in sectors historically associated with government domination.
Additionally, EIH's mandate to attract and facilitate private investments through co- investment platforms may create new opportunities for both foreign and domestic investors. By consolidating underutilized state assets and redirecting them into monetizable ventures, EIH may help investors access sectors such as infrastructure, industrial parks, and energy, offering a chance for collaboration on large-scale projects.
Furthermore, the existing PPP framework encourages private sector participation in public projects, particularly in infrastructure development areas such as energy, transport, and healthcare. This approach leverages private capital, technology, and expertise while maintaining government oversight through structured agreements. The framework also provides government-backed guarantees and shared-risk models, potentially making such investments more appealing compared to purely private ventures.
Together, the efforts of EIH, the Public Enterprises Proclamation, and the PPP framework signal a shift in Ethiopia’s investment landscape, offering an environment where government assets are more systematically managed, and investment opportunities are better structured. These developments may provide a pathway for investors interested in exploring long-term prospects in an emerging market.
Potential advantages for investors
For prospective investors, the Ethiopian Investment Holdings, backed by comprehensive legislative reforms, offers a unique opportunity to engage in Ethiopia’s evolving economic landscape. By collaborating with government entities and EIH subsidiaries, investors can contribute to and benefit from the country’s sustainable development efforts, driven by a strategic focus on asset optimization and foreign capital attraction.
Government investment entities have the capacity to take on higher-risk projects that may not be attractive to private investors, such as greenfield infrastructure projects, public services or emerging markets. They also play a catalytic role by de-risking projects, making them more attractive for co-investment by the private sector.
Government investment wings also act as FDI facilitators, partnering with foreign entities to bring in international capital, technology, and expertise. They offer regulatory clarity, and reduce red tape, making the investment environment more appealing to investors. The involvement of a government investment wing in a project increases credibility and trust, both for domestic and international investors. EIH offers 24 investment opportunities across six major thematic areas:
1. Agriculture & Food Security
- Primary Agriculture
- Fertilizer
- Seed Multiplication
- Reforestation/carbon trading
- Sugar
2. Logistical Infrastructure
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Trucking
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Oil tank farm
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Economic (Free Trade Zone)
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Cold Chain
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Ethiopian Railways capacity Enhancement
3. Renewable Energy
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Solar
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Wind
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Electric Vehicle
4. Manufacturing / Processing
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Security Printing
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Animal Feed
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Cement
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Pulp processing
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Computer tablets assembly
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Mining
5. Real Estate
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Wellness sector
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Underutilized urban land
6. Health Services
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Tertiary Hospital development
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Pharmaceutical/Vaccine