Source: Borkena

By: Yihenew Ewnetu 
Sweden 

Executive Summary 

Ethiopian Investment Holdings (EIH) represents a monumental and highly controversial shift in the Ethiopian state’s management of its domestic assets, infrastructure, and the biometric identities of its citizens. By consolidating 41 state-owned enterprises (SOEs) into a single sovereign wealth fund conservatively valued at approximately $50 billion, the federal government has centralized immense economic, logistical, and informational power directly into the Office of the Prime Minister (IE University, 2024, p. 97). This comprehensive analysis investigates the intersection of EIH’s commercial mandates with the Prosperity Party’s (PP) overarching  political, security, and hegemonic objectives. 

Ethiopian Cultural Products

While the initial formation of EIH was framed by the Abiy Ahmed administration as an exercise in economic liberalization and the professionalization of state assets—spearheaded in part by the dismantling of the deeply corrupt, military-run Metals and Engineering Corporation (METEC)—the reality is a vast expansion of executive control. Prime Minister Abiy Ahmed serves as the Chairman of the EIH Board of Directors, ensuring that the institution functions not as an autonomous commercial entity governed by independent boards, but as a direct instrument of executive power (IFSWF, 2022, p. 2). Consequently, the promise of privatization has been wholly abandoned in favor of a hyper-centralized holding company that actively stifles private sector growth and crowds out domestic competition. 

Furthermore, the unprecedented integration of Ethiopia’s national digital ID program (Fayda) into EIH’s commercial portfolio presents severe ethical and security risks. As highlighted by the transfer of the biometric ID system into a state-owned enterprise (FSX Business, 2024, p. 1), this maneuver explicitly demonstrates that EIH is designed to achieve political and government security goals rather than purely economic ones. Operating in an environment plagued by ethnically politicized conflict, the EIH model provides the logistical and financial backbone for military mobilization while simultaneously creating the ultimate digital infrastructure for systemic surveillance and authoritarian entrenchment. 

Introduction—The Genesis and Architecture of EIH 

To comprehend the magnitude of Ethiopian Investment Holdings (EIH), it is imperative to trace its historical and institutional genesis. Historically, Ethiopia has resisted the neoliberal model of total privatization, opting instead for a highly centralized, state-led developmental model (U.S. Department of State, 2024, p. 4). When Prime Minister Abiy Ahmed assumed office in 2018, his administration initially signaled a stark departure from the past, promising sweeping macroeconomic reforms, the opening of the telecom and banking sectors to foreign investors, and the privatization of lethargic state-owned enterprises. A critical early step in this supposed liberalization was the dismantling of the Metals and Engineering Corporation (METEC), a sprawling, military-run industrial conglomerate infamous for its inefficiency, massive debt accumulation, and pervasive corruption. However, rather than genuinely privatizing the viable components of METEC or establishing autonomous, board-governed institutions, the Abiy administration pivoted. By December 2021, the government established EIH, swallowing the restructured remnants of METEC along with the nation’s most lucrative monopolies—including aviation, telecommunications, and finance (IFSWF, 2022, p. 3). 

Crucially, Prime Minister Abiy Ahmed installed himself as the Chairman of the EIH Board of Directors. This structural decision collapsed the boundaries between the state apparatus and commercial enterprise, placing the entirety of the nation’s sovereign wealth under direct executive leadership. Instead of allowing state institutions to be managed by autonomous boards, or partially privatizing them to stimulate market competition, the administration consolidated all national assets under a single holding (U.S. Department of State, 2024, p. 7). This hybrid model of state capitalism—heavily intertwined with the ruling Prosperity Party’s political survival—forms the foundation of Ethiopia’s current economic landscape. 

The Illusion of Privatization and the Stifling of Private Competitiveness 

The establishment of EIH fundamentally contradicts the Abiy administration’s early promises of fostering a robust, competitive private sector. By hoarding the nation’s most profitable sectors within a sovereign wealth fund overseen by the Prime Minister, EIH actively impedes the growth and competitiveness of private institutions (U.S. Department of State, 2024, p. 11). 

● Monopolization of Credit: With the Commercial Bank of Ethiopia (CBE) residing under the EIH umbrella, state-directed lending disproportionately favors EIH mega-projects and “corridor development” initiatives. This severely crowds out small and medium-sized enterprises (SMEs) and private businesses, denying them the vital liquidity necessary for expansion and innovation. 

● Barriers to Entry: The massive consolidation of logistics, energy, and telecommunications means that private firms are forced to rely on EIH monopolies for basic operational necessities. The lack of partial privatization or autonomous regulatory oversight allows EIH entities to set non-competitive pricing, effectively functioning as a tax on the broader private economy. 

● Foreign Direct Investment on State Terms: While EIH was designed to attract FDI, it forces foreign capital into co-investment platforms with the state rather than allowing independent market entry. This dynamic ensures the state retains ultimate control over lucrative sectors, deterring private institutional investors seeking standard, free-market operational autonomy (IE University, 2024, p. 98). 

Historical Context—From TPLF’s EFFORT to PP’s State Capitalism 

The current economic architecture under the Prosperity Party cannot be fully grasped without directly comparing it to the era of the Ethiopian People’s Revolutionary Democratic Front (EPRDF), which was heavily dominated by the Tigray People’s Liberation Front (TPLF). During the TPLF’s three-decade rule, the party maintained an iron grip on the economy through party-affiliated endowments, most notably the Endowment Fund for the Rehabilitation of Tigray (EFFORT). EFFORT operated as a massive conglomerate with vast interests in banking, construction, logistics, and manufacturing. While legally classified as a non-governmental endowment, it functioned as the economic wing of the ruling party, utilizing state influence to secure contracts, access foreign exchange, and crush private competitors (U.S. Department of State, 2024, p. 5). 

The creation of EIH represents an evolution and massive federal expansion of this exact model. When the Prosperity Party was formed—absorbing most regional parties into a single national entity—it required a mechanism to finance its national vision and consolidate power away from regional elites. EIH serves this exact purpose, but on a federal, hyper-centralized scale. The promise of transitioning from party ownership (the EFFORT model) to a liberalized private economy has been abandoned. Instead, the Prosperity Party has modernized party-state capitalism. By placing the country’s telecom, banking, and aviation sectors under one roof, the PP ensures that no independent private sector can amass enough wealth to challenge its  political hegemony. 

The Strategic Assets and Commercial Facade of EIH 

Established by the Council of Ministers (Regulation No. 487/2022), EIH operates as the strategic investment arm of the Government of Ethiopia. As the largest sovereign wealth fund in Africa, it manages assets conservatively valued between $45 billion and $50 billion (IFSWF, 2022, p. 1). EIH successfully consolidated 41 of the most critical state-owned enterprises into a single portfolio. 

Sector Primary EIH Enterprises Strategic Role in Hegemony
Telecommunications Ethio Telecom Control over national communication infrastructure, internet access, and digital surveillance gateways.
Aviation Ethiopian Airlines Group Global logistics, hard currency generation, and rapid military troop deployment.
Finance Commercial Bank of Ethiopia (CBE), Ethiopian Insurance CorporationMonopolization of domestic credit to fund state mega-projects at the expense of the private sector.
Infrastructure Industrial Parks Development Corporation (IPDC)Control over real estate, strategic trade corridors, and urban gentrification initiatives.

While EIH operates under a commercial mandate to maximize value and transition legacy monopolies into profitable ventures adhering to International Financial Reporting Standards (IFRS), this commercial facade masks the deep structural politicization of these entities. Recent reports indicating an 86% surge in revenue (1.5 trillion Birr over nine months) do not merely reflect business acumen; they represent the effective extraction of wealth from the broader economy by state monopolies (IFSWF, 2022, p. 4). 

Corridor Development, Urban Gentrification, and Logistics 

A central pillar of the Prosperity Party’s domestic policy is the aggressive pursuit of “corridor development”—initiatives aimed at connecting economic hubs, modernizing urban landscapes, and creating seamless logistics routes to neighboring ports. EIH 

serves as the operational engine behind this transformation. Through subsidiaries like the Industrial Parks Development Corporation (IPDC), EIH manages a vast network of industrial parks strategically placed along the Addis Ababa-Djibouti transport corridor, acting as a state-capitalist landlord (U.S. Department of State, 2024, p. 12). 

However, these developments have immense socio-political consequences. EIH enterprises execute major infrastructure projects that drastically modernize Addis Ababa and regional capitals through aggressive gentrification. This frequently involves the mass expropriation of land, the displacement of lower-income residents, and the demolition of historic neighborhoods. Because EIH coordinates construction, real estate, and utility enterprises under a single executive-led umbrella, the PP can execute these projects with unchecked efficiency, reshaping the physical landscape to reflect the party’s vision of modernity while actively bypassing standard municipal oversight. 

Dual-Use Infrastructure: The Military and Security Imperatives 

Ethiopia has been embroiled in severe internal conflicts, beginning with the Tigray War in 2020 and continuing with extensive military operations in the Amhara and Oromia regions. Within this volatile context, EIH-managed entities serve critical dual uses. Ethiopian Airlines, alongside national railway and shipping logistics networks, provides the indispensable logistical backbone for the rapid deployment of Ethiopian National Defense Force (ENDF) troops, weaponry, and supplies. 

Ethiopian Cultural Products

By housing these strategic assets within a sovereign wealth fund, the government effectively shields them from international sanctions or commercial boycotts, presenting them to the global community as purely civilian, profit-seeking enterprises (IE University, 2024, p. 101). Yet, the reality of the Prosperity Party’s total control over EIH ensures that commercial aviation, heavy engineering, and telecommunications are seamlessly integrated into the military-industrial complex whenever domestic counter-insurgency operations necessitate their use. 

Red Sea Geopolitics and Sovereign Wealth Diplomacy 

The geopolitics of the Horn of Africa are fundamentally defined by access to the Red Sea. As a landlocked nation, securing reliable and sovereign maritime access is the Prosperity Party’s top geopolitical priority. EIH has stepped out of the boardroom and directly onto the geopolitical stage to execute this vision (Global SWF, 2025, p. 1). 

Global SWF reports highlight that EIH has been utilized as the primary financial vehicle for Ethiopia’s maritime strategies. By engaging directly with cash-rich sovereign wealth funds from the Middle East—particularly the United Arab Emirates (UAE)—EIH attempts to secure the financial backing required to lease, build, or buy port infrastructure on the Red Sea coast (Global SWF, 2025, p. 3). This “sovereign wealth diplomacy” allows the Prime Minister to bypass traditional diplomatic channels and foreign ministries, negotiating massive, strategic infrastructure deals directly state-fund-to-state-fund. 

Fayda: Corporatization of National Identity for Political Security 

In a move that has drawn severe alarm from global privacy advocates, the Ethiopian government transitioned its National ID Program (NIDP)—known as the “Faydaverse”—into a commercial State-Owned Enterprise and placed it directly within the EIH portfolio (FSX Business, 2024, p. 1). Fayda is Ethiopia’s foundational digital ID, issuing unique 12-digit numbers derived from unalterable biometric data: ten fingerprints, dual iris scans, and facial recognition (National ID Ethiopia, n.d., p. 1). 

The explicit implication of moving Fayda into a sovereign wealth fund overseen by the Prime Minister is that EIH is intended to score  political and government security goals rather than genuine economic ones. While the government claims Fayda is mandated to generate profit via electronic Know Your Customer (eKYC) authentication services provided to banks and telecoms (World Bank Group, 2023, p. 15), biometric data intrinsically cannot generate traditional economic return on investment (ROI) without severely violating fundamental human rights. By corporatizing civil registries under an executive-led entity, the state abandons its role as a protector of identity, transforming into a data broker equipped with the ultimate tool for domestic surveillance, behavioral tracking, and population control. 

International Comparisons: The Anomaly of the Ethiopian ID Outsourcing Model 

Outsourcing or corporatizing the issuance of national IDs is a global trend, yet Ethiopia’s approach of embedding it within a profit-seeking sovereign wealth fund is entirely unique and deeply hazardous. India’s Aadhaar system (UIDAI), the closest parallel in its ambition to create a biometric Digital Public Infrastructure (DPI), remains a strictly governmental statutory authority under the Ministry of Electronics and IT. Its mandate is welfare distribution, not commercial ROI. 

Similarly, while countries like France (IN Groupe) and Germany (Bundesdruckerei) utilize 100% state-owned enterprises to produce secure IDs, these entities answer directly to Interior or Finance ministries under incredibly strict, legally isolated privacy frameworks. They operate as technical vendors, not data brokers. 

Ethiopia stands entirely alone by placing Faydaverse inside EIH, alongside Ethio Telecom and the CBE. The sovereign wealth fund whose mandate is to attract foreign co-investment now holds the unalterable biometrics of the population. This structural incentive drastically departs from international norms and exposes citizen data to unprecedented foreign and commercial risks. 

International Agreements and Biometric Coercion 

The rapid expansion of the Fayda system is not occurring in a vacuum; it is heavily subsidized by international actors, notably the World Bank and the UNHCR (World Bank Group, 2023, p. 5). Recent agreements, specifically the “Makatet” framework, aim to integrate refugees in Ethiopia into the national healthcare, education, and employment systems (Migration Policy Institute, 2026, p. 2). Backed by Western donor funding, this framework eliminates parallel humanitarian services. To access this new integrated system, refugees and host communities are required to register for the Fayda biometric ID (UNHCR, n.d., p. 1). 

This dynamic introduces a deeply coercive environment. Citizens and highly vulnerable refugee populations are essentially forced to hand over their irises and fingerprints to a state-owned commercial entity in order to access life-saving healthcare, public schooling, and food rations. While Western institutions frame these agreements as progressive steps toward “financial inclusion,” they are inadvertently funding the creation of a massive, centralized biometric dragnet, outsourcing the financial cost of building a surveillance state to international taxpayers. 

The Weaponization of Ethnic Identity and Digital Totalitarianism 

The most severe threat posed by the Fayda system under EIH is its potential for weaponization. In Ethiopia, personal data is inherently ethnic; a citizen’s name, registered address, and region of origin serve as direct proxies for their ethnic identity. In a nation where the state has recently waged brutal wars against its own people in Tigray, and is currently engaged in widespread military campaigns in the Amhara and Oromia regions, this centralized biometric database allows the state to instantly profile its population. 

If the Prosperity Party deems a specific region or ethnic demographic as a threat, Fayda provides the exact geographic and personal data required for targeted crackdowns. Biometric IDs can be utilized at physical military checkpoints to identify, detain, or disappear individuals seamlessly. Because Fayda is the gateway to the EIH-controlled banking and telecom systems, the weaponization of this ID can be executed remotely. With a single administrative command, the state can deactivate the Fayda IDs of individuals from a rebellious region, locking them out of their bank accounts, deactivating their SIM cards, and revoking their access to healthcare. Fayda provides the ruling party with the unprecedented ability to digitally erase opposition demographics and enforce mass collective punishment without firing a single bullet. 

Conclusion: Systemic Risks and the Future of Governance 

The transformation of Ethiopian Investment Holdings from a sovereign wealth fund into the central nervous system of the Prosperity Party represents a chilling evolution of authoritarian state capitalism. By abandoning genuine private sector liberalization in favor of executive-led monopolies, PM Abiy Ahmed has replicated the TPLF’s party-owned economic model, scaling it to stifle domestic competition and centralize all wealth directly under his leadership. EIH seamlessly merges commercial goals with military logistics and Red Sea geopolitics. 

However, the absorption of the Fayda national ID system into EIH crosses a critical threshold. Supported by international aid frameworks, the Ethiopian state has engineered a coercive surveillance apparatus. The Faydaverse is not a tool for financial inclusion; it is a loaded weapon. By combining unalterable biometric data, telecommunications, and banking under a single, politically directed commercial entity, the Prosperity Party has built the ultimate infrastructure for digital totalitarianism, ensuring that EIH functions as the primary engine for its indefinite  political survival. 

Editor’s Note: Views in the article do not necessarily reflect the views of borkena.com  

References 

FSX Business. (2024, May 12). Ethiopia moves national digital ID into state-owned enterprise. FSX Business. 

Global SWF. (2025, June 25). Ethiopia’s maritime gamble: EIH steps onto the political stage. Global SWF  News. https://globalswf.com/news 

IE University. (2024). Sovereign wealth funds 2024: Resilience and growth in a new global landscape. IE Center for the Governance of Change. 

Click to access SovereignWealthFunds_2024report_IECGC.pdf

International Forum of Sovereign Wealth Funds (IFSWF). (2022). Ethiopian Investment Holdings: Member profile. IFSWF Database. 

Ethiopian Cultural Products

Migration Policy Institute. (2026, February 18). Ethiopia crafts a roadmap for refugee inclusion amid global aid cuts. MPI Journal. 

National ID Ethiopia (NIDP). (n.d.). Fayda services and biometric registration. Government of Ethiopia. https://id.gov.et/ 

UN High Commissioner for Refugees (UNHCR). (n.d.). Overview of Fayda Digital ID – UNHCR Ethiopia. UNHCR Help. 

U.S. Department of State. (2024). 2024 Investment climate statements: Ethiopia. Bureau of Economic and Business Affairs. 

World Bank Group. (2023, December 13). Ethiopia digital ID for inclusion and services project (Report No. P179040). World Bank Documents & Reports. https://documents.worldbank.org/