Wednesday, June 12, 2024
BusinessEIH board contemplates swallowing Land Bank Corporation mandates

EIH board contemplates swallowing Land Bank Corporation mandates

Corporation transfers documents, project studies

Executives of the Ethiopian Investment Holding (EIH) are reviewing modalities to take over the mandate of the Land Bank Development Corporation (LBDC). If approved, the EIH will be directly responsible for managing and developing landholdings held by federal institutions and state-owned enterprises (SOEs).

The options for transferring the mandate include merger, acquisition, or establishing the corporation as a portfolio department or business unit within the EIH. While the study is underway, the Corporation has already started transferring the documents and project studies to the EIH, according to The Reporter’s sources.

Even though officials from the Corporation that spoke to The Reporter say it is a merger, EIH officials argue the modality is yet to be confirmed. The Board is expected to pass the final decision regarding the modality soon, according to the officials.

During a recent event, Lensa Mekonen, CEO of the Corporation, noted that the merger with the EIH is already underway.

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LBDC was established in 2018 as a SOE mandated to identify, manage, and develop land holdings under federal institutions and SOEs.

EIH, on the other hand, was established in January 2022 with a whopping 100 billion birr of authorized capital, of which 25 billion is paid up in cash and in kind. EIH is the first sovereign wealth fund the Ethiopian government established. It took 27 SOEs under its wing as subsidiaries in June 2022, of which the Corporation is one.

The Corporation identifies, fences, administer, and develops the land, partnering with investors. Once the LBDC merges with EIH, these tasks will continue.

The major task of the EIH, on the other hand, is attracting investments to the lands under the Corporation. Thus, the Corporation’s mandate is better executed if it is under the EIH, according to the officials.

“The merger process has begun and is required to allow the Corporation’s pillars to be implemented on a larger scope under the EIH,” a corporation official stated.

 The EIH’s primary goal is to manage federal holdings, including federally owned lands. “The LBDC’s eight activities and mandates will be transferred to the EIH. However, the mode of the mandate transfer has not yet been determined.”

The official says that the corporation is transferring documents and project studies to the EIH. “The next step will be relocating the LBDC teams to EIH.”

Once the process of transferring the mandate is finalized, the Corporation will potentially cease to exist, according to the official, who says the Corporation will not be embarking on new projects anymore.

“It is unclear whether it will be a merger or another form. Currently, liquidation, legal, clearance, and other issues are underway. So, it is not the right time to discuss the issue at the moment. It is at the review stage currently. The government will determine the modality,” another official at the EIH said.

Land is a state asset, and the way it is managed is also decided by the government, says the EIH official.

“At this moment, nobody knows what the government’s decision will be. The Corporation was a subsidiary of the EIH, and it can change that modality.” The official claims that the EIH can make the Corporation just a branch or a department of the EIH. “That will be the decision of the executive.”

Officials at both the EIH and the Corporation, are awaiting the Board’s final decision. The Board includes Ahmed Shide, finance minister, Girma Birru, macroeconomic advisor to the PM, Birhanu Nega (PhD), education minister, Teklewold Atnafu, monetary advisor, Frehiwot Tamiru, CEO of ethio telecom, Eyob Tekalign (PhD), state minister of finance, Tegegnewrok Getu (PhD), board director of DBEM, and Mamo Mihretu, governor of the central bank.

PM Abiy Ahmed (PhD) serves as the board’s chair.

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