Ethiopian Investment Holdings (EIH), the entity responsible for managing 34 state-owned enterprises, has announced an ambitious initiative to fully fund the government’s budget deficit within the next five years. This plan comes at a critical time as Ethiopia grapples with significant budget shortfalls exacerbated by various global and domestic economic pressures.
EIH is currently contributing to offsetting the deficit through its profits and projects a substantial increase in revenue that will enable it to close the gap entirely. “Our state-owned enterprises should be the main driving force for economic growth,” said EIH CEO Brook Taye (PhD). He emphasized the importance of these enterprises in strengthening the country’s finances and highlighted past contributions, including a dividend payment of 5.8 billion birr to the government in the last quarter, with plans to increase this to 14 billion birr this year.
The initiative reflects a shift towards an autonomous approach to fiscal management, aiming to reduce reliance on foreign borrowing and create a sustainable financial environment. However, achieving this goal will require significant improvements in the performance and profitability of state-owned enterprises, addressing issues such as operational inefficiencies and governance challenges.
The success of EIH’s plan could have far-reaching implications for Ethiopia’s economy by alleviating the budget deficit burden and freeing up resources for critical investments in infrastructure, education, and health. This initiative also underscores the government’s commitment to enhancing the role of state-owned enterprises as engines of growth within the economy.
In a related development, EIH is set to acquire a stake in Scandinavian company Ethno Mining, which has commenced gold production in Ethiopia’s Akobo district. This strategic move marks a significant expansion into the gold mining sector and reflects EIH’s broader goals of diversifying its investment portfolio.
