Mortgage financier, Goh Betoch, lobbies for a housing fund

The one and only mortgage bank in Ethiopia, Goh Betoch Bank (GBB), tables its policy recommendations to the central bank, National Bank of Ethiopia (NBE), for an introduction of a housing fund in the country.
The housing fund which has a primary motive of mobilizing funds like pension and provident funds to support the housing scheme at suitable rates, whilst also offering a better alternative for residents, despite being a new notion to the country is popular among the region and developed countries.
For instance, in Nigeria, the National Housing Fund (NHF) allows a contributor to access a loan for the building, purchasing, or a renovation loan for residential accommodation, among other benefits. A contributor enjoys benefits from the National Fund scheme including: low-interest rates for housing loans, and reduced tax liability because contributions to the NHF are tax-deductible.
In Kenya, a similar body, National Housing Development Fund was formed in 2018 with an objective of raising funds from various sources in an initiative aimed at providing affordable housing. The Kenyan Fund is now providing long-term financing to primary mortgage lenders such as banks, microfinance institutions, and SACCOs at low and fixed interest rates.
In Ethiopia, however, the initiative and ownership is expected to be handled by the government and similar to other countries, the mortgage bank, GBB has initiated the idea for the financial sector regulatory body to come up with the initiative as an alternative source of fund for the housing projects in the country.
“It shall be established and operated by the government like pension funds as a public institution but with a purpose to construct houses,” Mulugeta Asmare, President of GBB, clarified adding, “Such kind of funds may not happen overnight but the government should take the initiation to embark on the same.”
As Mulugeta further elaborated, the fund will provide loans for financial firms or real estate developers.
“We have tabled our proposal to NBE but it may not be the right body for that. We believe that the fund will be formed through one of the government bodies,” Mulugeta told Capital.
He reminded that such kind of entities have a big role to steady the economy besides providing finance for the housing industry.
“For instance when the financial crises happened in 2008 such kind of funds played a vital role for a bailout to the mortgage industry,” he recalled on the positive aspects of the fund.
“Housing schemes need coordination of all stakeholders including the regulatory body, public enterprises and the private sector with the general public. We hope that the government will consider the sector challenge and come with massive alternatives,” Mulugeta, who is one of the successful leaders on the banking industry, explained.
As the standalone private mortgage bank in the country after half a century, the bank has expressed its expectations from the relevant regulatory body and other public offices to boost its goal and provide finance and houses at an affordable and swift scheme.
For instance, the bank has requested NBE to come up with a directive that is suitable for such kind of banking industry that was welcomed by the regulatory body, which is now drafting a relevant law to support the mortgage industry.
GBB has also tabled some sort of policy support from relevant government entities like Ministry of Urban Development and Infrastructure and others.
GBB officially joined the financial market in late 2021 and attained a promising performance in its first year of operation, which is mainly targeted at filling the housing sector while bridging the financing gap in Ethiopia.
Owing to the fact of little support from the current financial firms as well as government support, the housing market in the major cities across the country has proved to be of great socio-economic challenge.
To contribute its part, GBB is involved on various initiatives including partnering with potential developers to realize the provision of affordable houses with ownership at a lesser timeframe.
One of the strategies it set is constructing houses through its subsidiary. Recently the bank has sealed a deal with Goh Property Development and Marketing SC (GPDM), GBB’s subsidiary and housing developer, and the emerging construction company, Ovid Group to construct residential houses at the cost of 1.45 billion birr.
As per the deal, the developer will construct 270 houses on 2,851 square meters plot of land that is located around Yoseph Church, Nifas Silk Lafto Sub City.
The government has designed a ten year housing development plan to construct 4.4 million houses in the country and of that 80 percent is expected to be developed by the private sector.