FINANCING HOUSING

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(Photo: Anteneh Aklilu)

Goh Betoch Bank SC is a new dynamic bank in town which is set to open its doors soon. The bank when operations begin will be the first mortgage financial firm aiming to bridge the gap in the challenging financial housing market.
This extraordinary bank has its sight set on realizing a better form of housing for all Ethiopians by providing strong financial schemes which stems from the great need of housing in the country. To make sure these goals are realized it has appointed its first ever president, Mulugeta Asmare, who himself is no stranger to the financial industry. Mulugeta’s career has grown astronomically over his close to 3 decade involvement in the financial industry. He has served also in top levels of management as he previously was the president of Abyssinia bank. Capital sat down with this financial expert, for an in-depth look into the country’s first private mortgage bank. Excerpts;

Capital: You are the first CEO of the first private mortgage bank in the country. How can you express this feeling?

Mulugeta: It is a big pleasure to be the first, however, at the same time it is a big challenge. We are getting in the market with a new system and operation which has never been in the country and it is going to be a strange and new arena.
We are trying to share experiences from other countries’ mortgage banks, which includes giving the proper education and trainings. So even if it is challenging, since its technically new grounds, we have embarked on this great journey, and we are confident that we will pass through the challenges and achieve great success in the process.

Capital: You have been leading one of the biggest banks in the country; don’t you think coming to a new organization will be a bit challenging?

Mulugeta: For the last 27 years I have been working in the banking sector in different positions up to the president or CEO level. For the last five years I have been working in Abyssinia bank as president. After my years of service, I saw it best to resign with my own consent so as to take a break and after one year of good recreation, I received an invitation from the organizing committee of Goh mortgage bank to join them.
Having realized the solution that they are going to provide in the market gap, which is important for the country and for the coming generation I wanted to be part of this monumental movement. However, in this market it is challenging to find the right CEO or president that can steer the financial institution to great strides. Moreover, to find the person with the right experience is a hurdle since in the sector there is a lack of experience in man power. Noting these challenges I decided to step up to be the CEO for a temporary period.
As the bank is new to joining the sector more so to the financial housing niche, I can understand that it can be presumed to be challenging since financing housing is one of the biggest challenges in the country. However, from my point of view, the bank could benefit our country, and I have decided to make a comeback not disregarding the challenges, but acknowledging that this could play an instrumental role in paving better housing for our country.

Capital: Can you elaborate for us the formation of the bank as a whole and also government’s support to its formation?

Mulugeta: Most of the financial institutions and their formation in our country are based on some regional, religious, ethnicity and similar foundations. This is of course always disheartening.
However as the political sphere of the country was the same, and as result lots of investors formed banks with someone they trusted and thought the customers would be drawn to them with the affiliation on the aforementioned basis of their bank’s formation. Of course not all banks are like that, there are some banks which are free from such kinds of formation but the effect is not noticeable.
Goh Mortgage bank is free from such kinds of mindset. This is evident since even the eleven organizers stem from different ethnic groups with different political views but have come together to join hands for a greater purpose. Individually, they are bankers with long experience in the sector with no personal interest except from forming the bank and benefiting the society and the country by solving the problem in the housing sector.
So we believe it will continue, by building a healthier Ethiopian institution which is free from any influence of religion, ethnic, or political beliefs.
The bank will engage mainly in financing the housing sector, and will also operate other banking operations which are similar with other commercial banks.
We are planning to support the majority of our society to have their own house by giving out long term loans, and to this end government has provided its backing as the National Bank of Ethiopia gave us the green light to for the bank license and we are waiting to commence operation.

Capital: When do you plan to start the operation? Similarly, how have you prepared in terms of technological readiness?

Mulugeta: In terms of technology we have selected a company called Technos in a bid to build a core banking system. With regards to opening our doors we plan to do that in the coming month. As we embark on our operation, we will use locally developed software for the transition period until the company completes its work, then we will upgrade to the same.

(Photo: Anteneh Aklilu)

Additional to the core banking, we are also building our own data center which will be completed in few weeks and be operational.
We have organized our head office and some branches; we have already hired employees and gave them trainings. The last thing we are waiting for is green light from the national bank to start our operation based on its supervision, since we have already received the license.
As previously mentioned, we are planning to start our operation in September 2021, and our doors are open to provide so our services to any Ethiopian citizen who can full fill the given criteria.

Capital: What kind of support are you waiting from the national bank, and also are you working with the Ministry of Urban Development and Constructions?

Mulugeta: The Ministry of Urban Development and Constructions is one of the different stakeholders in the housing sector and knows the gap properly. It is authorized to control the quality and speed of construction and wants housing to be widely available; in this case we expect the full support from ministry to build completely standard houses. Additionally, we plan to work and engage with the city administrations and also the mayor offices which are some of the other stakeholders.
The central bank is the superior bank where all the commercially banks are equally administrated. However since we are coming in with a different kind of bank, I believe that we need different kinds of practice stemming from the central bank. One of the biggest support of the national bank include; assembling long term deposit and loan and also creating a special policy practice where the central bank can create a conducive environment for the bank to thrive.
Additionally we may start working with international financial institutions to get long term funds and to this end we need the national bank to make new practices to facilitate our access and use of fund.
Prime Minister Abiy Ahmed has also said that the banking sector is only open for foreign mortgage bankers, which is a great move so we take it as a direction of hope that the national bank will also prepare different framework’s to benefit the new upcoming local bank as well.

Capital: How will the loan period being provided work?

Mulugeta: There are three different loan-term periods. The first one is a short term loan which has to be paid back in 12 months or in one year.
The other one which is stretched up to five years is the medium loan term whilst the last which is over five years is to be provided as the long term loan period. The last one could go for up to 30 years. Most of the loans in mortgage banks are long term loans. It is with this provisions that we seek a special policy framework from the national bank to allow us to give long term loan without proportion.