Ethiopia for the first time is set to launch a full-fledged private mortgage financial institution known as Goh Betoch Bank. This bank is currently gathering a lot of momentum as the shares of the bank are already being sold and marketed by prominent people in the banking and construction sector in the country.
According to Addisbiz.com, the prominent people include an ex-banking regulator and vice governor of the National Bank of Ethiopia (NBE), Getahun Nana, the organizing committee also features a prominent real estate personality—Gebreyesus Igata of Gift Real Estate Plc— and other former banks presidents like Fasika Kebede, Amerga Kassa and Araya Gebregziabher.
Ethiopia is currently, facing about 1.2 million housing shortage. There is rapid population growth and an acute shortage of affordable housing, in its capital Addis Ababa and in smaller cities across the country. Although the government have been building condominium units targeting low and middle-income groups, through public funds, it still needs to provide additional houses every year in order to meet the growing demand for housing.
The country has for ten years witnessed a double-digits economic growth for ten years, the poverty rate has decreased, urbanization has expanded and the per-capita income of citizens has increased but it is still faced with housing deficit.
However the country’s Minister of Ministry of Construction and Urban Development, Eng. Aisha Mohammed expressed her hope that the new bank will benefit individuals who are engaged in real estate and those who are interested in building their own houses.
“…This is more than a business…It is a social service …like saving the country from a housing crisis…Making a family a house owner is like supporting the development of the country…The private-public partnership scheme recently introduced by the government focusing on mega infrastructure projects is now including housing development as its priority,” Aisha said further.
The bank expects to invest about $2.4 million per year in housing development for over its operation. It also expects to get a return on investment of 32percent after five years with a profit of around $1.7million.
The news about the mortgage bank comes after prime Minister Abiy Ahmed made a raft of economic reforms aimed at boosting the country’s economy which includes opening up its banking sector to private and foreign investment. The country which is regarded as one of the countries that are tightly state-controlled in Africa is dominated by the two oldest and most profitable institutions, Awash Bank and Dashen.