The Ethiopian Investment Holding (EIH), a recently formed state owned commercial entity which is a public wealth fund that holds 27 mammoth public enterprises with an estimated asset holding of over two trillion birr within its portfolio, has conducted an onboard summit.
The aim of the formation of EIH was to maximize the value of state owned assets through professional management leveraging international best practice and as Mamo Mihretu, founding CEO of EIH, explains, the 27 assets that are classified in eight sub-sectors play a significant role on the Ethiopian economy.
“In the past budget year, the enterprises generated a revenue of 350 billion birr, which is projected to grow by 46 percent to reach 540 billion birr for the current budget year. Moreover, in terms of profitability and resilience they have contributed 10 percent to the GDP,” Mamo explained during the summit which was held at the hall of the newly inaugurated Commercial Bank of Ethiopia’s (CBE) HQ.
These enterprises have settled 16 billion birr as dividends for the government and their tax contribution was eight percent of the GDP.
“If these assets shall be managed professionally with international best practices, they will certainly contribute to a better Ethiopian economy,” the CEO said.
Mamo told media that the main objective of EIH is to serve as a strategic investment arm of the government.
“It will finance development and create wealth for the current and future generation of Ethiopia. Source of finance for development comes from budget that is aligned with tax, external aid and loan; but as per the experience of other countries we have to finance development projects with alternative sources,” Mamo said, adding, “the formation of EIH shall utilize and mobilize the assets of public enterprises as a development instrument and create better wealth.”
“Unlocking the value with professional administration will be the strategy to meet the goal of the strategic investment arm of the government; in addition to mobilizing the assets and creating new values, and attracting investment by creating skills and involving new investments in conjunction to including foreign capital flow,” he added.
Ahmed Shide, Minister of Finance and board member of EIH, said that the mission of the public wealth fund is to usher in global investment and modern capabilities in line with the interest of Ethiopians.
Mamo said that the 27 enterprises, which have over two trillion birr in assets collectively, currently registered under EIH, are mainly selected though different criteria including commercial goals, with more enterprises to be included in the future.
Through the hospitality sub sector Ghion Hotel, Hilton Hotel, Spa Service Enterprise, and Genet Hotel are included, while the transport and logistics sub sector has added Ethiopian Airlines, Ethiopian Shipping and Logistics Services Enterprise, and Ethiopian Toll Roads Enterprise.
Ethiopian Trade Business Corporation, Ethiopian Agricultural Businesses Corporation, and Ethiopian Tourist Trading Enterprise have been included in the trade sub sector, whereas the Ethiopian Pulp and Paper, Educational Materials Production and Distribution Enterprise, Berhanena Selam Printing Enterprise, and the Ethiopian National Lottery Administration have been included under the manufacturing sub sector.
The finance sub sector accommodates the financial giant CBE and Ethiopian Insurance Corporation, while Land Bank and Development Corporation, Ethiopian Construction Works Corporation, Ethiopian Engineering Investment Group, Federal Housing Corporation, and Ethiopian Electric Utility are part of the construction and real estate division.
The Ethiopian Mineral, Petroleum and Biofuel Corporation, Chemical Industry Corporation, Sugar Industry Group, National Alcohol and Liquor Factory, and Ethiopian Petroleum Supply Enterprise are part of Chemical sub sector, whilst the communication sub sector is handled by Ethio Telecom.
EIH holds first onboard summit spearheading generational wealth
EU commissioner visits Ethiopia to access humanitarian status quo
Commissioner for Crisis Management, Janez Lenarčič visits Ethiopia on June 20-21, to see first-hand the humanitarian situation in the northern parts of the country.
With his visit, the Commissioner reaffirmed European Union’s support for the humanitarian response needed in the north of the country as well as in the south and south-eastern parts of Ethiopia, hit hard by a prolonged drought not seen in the past 4 decades.
He also discussed the humanitarian situation with the Ethiopian authorities, the authorities of the Somali region, the humanitarian community, and some people in need. Lenarčič also met with Deputy Prime Minister Demeke Mekonen and Tigray regional authorities in Mekelle.
He said at a news conference in Addis Ababa on Tuesday that the number of trucks bringing food to the regional capital, Mekelle, has almost reached the level necessary to cover the basic humanitarian needs of the people of Tigray.
“I took note of the recent progress on provision of some basic humanitarian assistance. I welcome the increased number of trucks entering the region. However, much of the blockade of Tigray remains. The desperate situation, which I witnessed first-hand when visiting the hospital in Mekelle, requires the urgent scaling up of humanitarian aid so that humanitarian workers can deliver assistance to all in need, including people outside of the capital of Tigray.”
However, he said the aid effort needs more fuel so that humanitarian workers can deliver assistance to all in need. “More fuel is needed because without it, even this food assistance that comes to Mekelle cannot reach rural areas, where the needs are highest, fuel shortages due to government restrictions have severely limited access to life-saving supplies, even as aid warehouses are full,” the EU’s commissioner for crisis management explained.
Lenarčič also urged Prime Minister Abiy Ahmed’s government to lift financial restrictions which are hampering the provision of basic services such as telecommunications, banks and electricity.
“I urged both sides to the conflict to seize the momentum and continue to build on progress made to-date, for full and unhindered access into the region, with sufficient supplies of food, medicines, fuel, and cash for humanitarian partners. Importantly, basic services need to be restored urgently to allow people to start providing for themselves,” he said.
“Despite the world’s attention mostly focused on the situation in Ukraine, the EU continues to stand by, with humanitarian assistance to the most vulnerable elsewhere around the globe, including Ethiopia’s most vulnerable – and I call on all parties involved to do their utmost to facilitate this aid reaching all those who need it most,” the commissioner explained.
“The EU continues to show its solidarity with the people in need in Ethiopia, many of whom are facing multiple, overlapping humanitarian crises. During my visit, I met people for whom the drought brought an end to their livelihoods as they had to leave their homes. I met parents worried about the health of their malnourished children,” said the commissioner, adding, “Even though emergency humanitarian assistants will be there whenever needed, yet humanitarian aid alone is not a solution. We need to look for longer terms for sustainable solution to address the root causes of such humanitarian crises due to the drought.”
In 2022, the EU allocated more than €58 million to life-saving humanitarian projects in Ethiopia, including support to conflict-affected people – in Tigray, Afar and Amhara, and other areas; assistance to people affected by food insecurity and children suffering from severe acute malnutrition; and continued aid to refugees in Ethiopia.
Gold exploration firm on verge of losing license
KEFI Gold & Copper PLC, of the Tulu Kapi Gold Mine project opposes the decision of Ministry of Mines in the termination of its license. Takele Uma, Minister of Mines announced on Wednesday, June 15, that the Ministry has revoked 972 licenses of which the Tulu Kapi Gold mining project has fallen victim.
“The government is applying lots of pressure to proceed, and we can understand that, however, we have been a bit shocked to hear the news of the termination on media to which we had no knowledge about. We did not receive any notification whatsoever which is shocking and disappointing,” said Harry Anagnostaras, executive chairman of KEFI, indicating that KEFI applies conventional industry project finance structures for the development funding.
“These companies did not comply with the terms of their exploration and production licenses despite the repeated warnings given to them,” Takele said.
“KEFI is processing debt from Africa development banks, TDB and AFC, and is capable of demonstrating full funding plans and capacity whenever requested by the government,” said the chairman adding that, “We are spending a lot of money preparing the procurement, and with hard work and diligence too. I think we are the only company working like that especially in the current status of the country.
“So far we have invested 80 million dollars and have made a good discovery and established a world class plant,” said the chairman, adding, “We were prepping for the full project launch for each project as soon all conditions were met in terms of the security situation in the country as it improves. We were planning to start construction in the dry season around October.”
Authorities from the ministry argued that the main issue with KEFI was the finance, to which they did not start their operation on time, in addition to not showing the capability to finance the project and not showing visible progress. “We have been giving them notices for several times and six month ago the ministry gave them the last warning to submit their financial status and ability,” stated the Mines Ministry.
Based on the notice, the Ministry had given KEFI up until the end of July 8. But since the Ministry foresaw that the company would not fulfill its conditions within a few days, they went through with the revocation. However KEFI argues that it is in good condition to fulfill its request
KEFI says it has maintained the full funding syndicate for the project. It plans to sign the funding “Umbrella Agreement” during the month June to demonstrate the full funding commitment, especially to the Ethiopian Ministry of Mines.
“The Ministry did not volunteer to have discussions with us,” explained the exploration firm.
After Wednesday’s announcement, according to sources the Ministry had sent a letter to KEFI to submit their financial report until June 30, indicating that if not adhered to, the termination will continue.
Kefi Gold & Copper PLC – Cyprus-based gold and copper exploration and development-company has projects in Ethiopia and Saudi Arabia.
With a Probable Ore Reserve of 1.05 million ounces and Mineral Resources totaling 1.72 million ounces of gold, KEFI is advancing the Tulu Kapi Gold Project in Western Ethiopia towards development.
The Tulu Kapi Mining Agreement between the Ethiopian Government and KEFI was formalized in April 2015. The terms include a 20-year Mining License, a 5% Government free-carried interest and full permits for the development and operation of Tulu Kapi.
The government became entitled to a 5% free-carry interest in Tulu Kapi upon granting of the Mining License in April 2015. The Exploration Licenses held by KEFI Minerals (Ethiopia) Limited cover an area of approximately 200 square kilometers over and near the Tulu Kapi deposit.
IMF delegates jet in to discuss reforms, developments
The delegation of the International Monetary Fund (IMF) during their latest visit have disclosed that Ethiopia’s exports and foreign direct investment (FDI) have held up well despite the turbulent economic environment.
A staff team from the IMF, led by Sonali Jain-Chandra, visited Ethiopia for a technical staff visit with the Ethiopian authorities during June 13-17.
In the statement, the international partner stated that the purpose of the staff visit was to discuss the authorities’ reform plans and economic developments, which could provide important input for a future mission to negotiate for a potential new Fund program.
It projected the growth to have fallen to 3.8 percent for 2021/22 fiscal year resulting from the conflict in northern Ethiopia, lower agricultural production, a sharp fall in donor financing and intensifying foreign exchange (FX) shortages, drought, and spillovers from the war in Ukraine. “Inflation has been high and rising, in addition to the rapidly increasing food prices and supply-side constraints,” the statement read.
It can be recalled that owing to the conflict in the northern parts of Ethiopia which was sparked by the TPLF, a former dominant political party in the country, had rendered international partners to pressure the central government including by suspending significant amounts of support that they promised.
IMF said that the Ethiopian economy has been subject to multiple shocks over the past two and a half years, including the COVID-19 pandemic, drought, conflict in the north of Ethiopia, and the war in Ukraine, “this has created significant macroeconomic and humanitarian challenges.”
It added that delivery of a debt treatment for Ethiopia under the G20 Common Framework, as part of a package supported by an IMF program, is essential to reduce debt vulnerabilities.
The authorities reiterated their interest in an IMF program to support their reform agenda.
“The Fund will continue to cooperate closely with the creditor committee to provide technical support to the Common Framework process and is working on steps towards commencing discussions on an IMF program as soon as conditions allow,” it said.
A year ago IMF called for the swift formation of the creditor committee for Ethiopia to enable the timely delivery of the debt operation that Ethiopia requested.
Ethiopia requested in February last year to G20 and Paris Club creditors to benefit from a debt operation under the G20 Common Framework. The authorities’ aim was to create fiscal space for development spending and to lower the risk of debt distress rating to moderate by re-profiling debt service obligations. The formation of the committee is said to help Ethiopia in this regard.
The IMF statement said that despite the economic environment being full of challenges, the country has enabled to attain positive export earnings and FDI.
“However, rising global commodity prices for fuel, food and fertilizer driven, in part, by the war in Ukraine, will increase imports and widen the current account deficit in 2021/22 fiscal year. This, combined with lower external loan disbursements has weakened the external sector and put downward pressure on reserves, which remain inadequate,” it added.
The IMF has also projected the budget deficit to expand while the reform of the Treasury bill market has facilitated substantial increases in the volume of issuances; the lack of external financing has required central bank advances to finance the larger deficit.
It said that the authorities remain committed to improving the efficiency of public investment, oversight and reforms of state-owned enterprises (SOEs) and containing public sector borrowing, consistent with their goal of meeting development objectives while strengthening debt sustainability.
“Progress on implementing roadmaps on FX reforms and modernization of monetary policy should help address FX shortages and reduce inflation. Revenue reforms consistent with ambitious revenue projections in the government’s 10-year plan will support sustainable financing of development needs,” it said.
It projected that continued progress on reforms to shift from public to private sector-led growth as laid out in the Homegrown Economic Reform Plan will contribute to high and sustainable growth over the long term.
On its regular evaluation through Article IV consultation, the IMF unusually did not publish Ethiopia’s last budget year’s economic evolution.
On its economic outlook publication that was issued April, 2022, the monetary fund disclosed that Ethiopia’s growth is expected to slow down from 6.3 percent in the fiscal year that ended 2021 to 3.8 percent in July 2022 because of the intensified military conflict in the first half of the fiscal year, the lingering effects of the pandemic amid low vaccination rates, and the spillovers from the war in Ukraine.
