EIH becomes newest Sovereign Wealth Fund

Ethiopia joins African countries that have Sovereign Wealth Funds (SWF). The SWF, Ethiopian Investment Holdings (EIH) will take ownership of selected public enterprises.
It is recalled that Prime Minister Abiy Ahmed stated that the country would have SWF to harmonize the country’s resources and manage public enterprises on good hand.
Mid this week, the Council of Ministers has disclosed that the regulation to form EIH has been endorsed.
On the announcement, it said that the role of EIH will be mainly to bring together government resources under a single administration. It is also responsible to stipulate effective administration boosting the economic of scale of the public resources.
It added that EIH will also be expected to create a competitive economic growth of the state assets.
On its social media page EIH said that it is the strategic arm of the nation and sets out to maximize the value of state-owned assets through professional management, leveraging international best practices.
Reliable sources said that the SWF will take some public enterprises that are currently managed by Public Enterprises Holding and Administration Agency (PEHAA). Sources said that the state owned enterprises that will not be transferred to SWF shall be continued under PEHAA, while it is not confirmed from relevant government officials.
As the experience observed from countries, SWF institutions are normally formed to manage national surpluses with the aim of building wealth and providing a sound financial foundation on which governments can formulate ambitious development or diversification policies.
SWF is also a means to mobilizing national resources and using them to attract additional foreign capital is the only way to ensure our economies’ financial independence.
Experts said that by mobilizing and leveraging national savings, SWFs shall not only increase governments’ capacity to finance public policies, but also could help to attract more foreign capital.
Recently Djibouti has established SWF, while in the past decade several African countries have followed the same path to establish the institution to back their national policies in the economy.
Capital’s effort to get further information from relevant officials at Office of the Prime Minister, Ministry of Finance, and PEHAA was unsuccessful.
A sovereign wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Sovereign wealth funds invest globally.