Ethiopia: Can Mortgage Banking Help Address Ethiopia's Rapidly Growing Demand for Housing?

Jul 28, 2020 | The Ethiopian Herald - All Africa

The demand for residential houses in Ethiopia is estimated in millions as it increases with an average of additional 150 thousand houses every year. But since house construction is too expensive and access to bank credit for housing is tough especially to individuals, there is a need for a new intervention to fill the gap, relevant experts said.

The critical problem in the sector, in addition to scarcity of land is access to finance mainly for low and middle income households. The experts argued that mortgage banking is vital in filling the financial gap in the sector.

The government has a plan to build 4.4 million houses in its ten year perspective development master plan out of which the private sector is expected to execute 80 percent. According to the experts, to meet the target plan, government should create suitable environment by widening the opportunities of financial sources and other supports to the private sector and individuals.

In Ethiopia there is a huge gap of credit service by the banking sector to build, repair and improve residential houses especially to individuals, approached by The Ethiopian Herald Kefeni Gurmu, General Manager of Goh-Betoch Bank project, a private mortgage bank currently on its final stage of joining Ethiopian banking sector, said.

According to Kefeni the share of credit service to the housing development by all available banks is less than four percent of the total, including the loan supplied for the government run condominium housing project.

Kefeni said, citing UN Habitat data, the share of housing credit service by the banking sector in Africa is less than one percent of the total loans, which is almost unavailable compared to other part of the world.

Kefeni stated that currently there is a demand for millions of houses in Ethiopia and to meet each year's additional demand, Ethiopia needs to build about 150 thousand houses every year. Not only that, Kefeni added, 70 percent of the available houses in cities do not fulfill the minimum standard for a decent housing that they either need improvement or additional utilities... Read more on All Africa

Source: All Africa