Businesses want to become big. They want their presence to be felt in every corner of the world. Investors explore different avenues to do this by injecting capital, selling equities, reinvesting their profits, opening different branch offices, acquiring other firms or merging with other entities. By the same token, corporations may also use these tactics to either dominate the market or protect their infant industry from other big entities.
All of these factors for expansion may also force Ethiopian business people to engage in changing their style of business. Nowadays, the government is trying to attract foreign investors by creating industrial parks, adding incentive packages and simplifying the service provision and bureaucratic aspects of the investment climate.
On the other hand, the government seems to engage in strengthening the capacity of its enterprises too. The focus on these enterprises may seem to either strengthen their capacity and prepare them for future challenges (or threats from other entities), or save the struggling entity through the umbrella of the successful one.
In this regard, the recent news about the amalgamation of Commercial Bank of Ethiopia (CBE) and Construction & Business Bank (CBB) can become a talking point among lawyers and economists. It can also trigger a lot of interesting debates and analyses.
Amalgamation is not a new phenomenon. It happens frequently worldwide. To give a recent example, Du Pont and Dow Chemicals, the largest US chemical companies, merged with capital of 113 billion dollars.