The private company announced to engage in house construction to support the government scheme and improve the lively hood of middle and poor – income citizens through providing loan up to 1 billion Birr.
The first ever established private mortgage bank known as Goh opened its branch office and began working.
The Bank President Mulugeta Amare indicated that, in order to improve the housing condition particularly the poor income segment of the society, the bank pursues four steps.
In addition to these, it ventures to get loan from foreign banks for the construction and supply house to the lower income group according to their capacity to pay the money.
When the Bank capacity grew, it constructs houses by the gained capital and provide to beneficiaries in the long-term loan.
The opportunity is created to citizens to construct and purchase house and to that end can secure loan from the newly established Goh mortgage Bank.
According to the Bank President, currently in Ethiopia there is a critical shortage of supply in the housing market.
“There is huge gap between supply and demand in the housing market and while the demand is high the supply is very low.
According to studies, currently in Ethiopian urban centers there is a high demand for residential houses but the supply is very low and to meet the demand more than 1.2 million residential houses should be constructed,” said Mulugeta.
To resolve the problems witnessed currently, more than 100,000 houses must be constructed annually.
More than 70 percent of residential houses in the city are bellow standard and are not fulfilled the requirement to be taken as residential house. Hence, when the Ethiopian Economy shows progress and reach to the middle income status, the old houses must be demolished and reconstructed.
To accelerate housing supply, finance serves as inputs and in this regard Goh Bank strongly works on.
On the occasion, the Minister of Urban Infrastructure Development Chaltu Sani said that, currently in the city shortage of residential house is a serious problem and to close the gap between demands and supply in the housing sector, the Bank should construct more than 400,000 houses.
Nevertheless, the number of the ongoing house construction is below the demand level and the problem is inter-generational in which still un resolved.
Even though the city has age old buildings and new modern residential areas, opportunities were not rendered to residents to play their own part in building of city which is modern and conducive for living.
There are various factors responsible for aggravating the problem and among others, the absence of sufficient land and financial provision and to resolve the problems efforts will be exerted based on the ten year perspective home grown economic plan.
The City Mayor Adanech Abebie on her part said that, the city administration is trying its level best to resolve house shortages and banks which are interested to involve in house construction like Goh Bank should be encouraged.
She further said that shortage of house is a problem for the city and other major towns and it is aggravating socio-economic problems. However, the government still continued to reverse the situation to the better.
The housing problem in the urban centers critically affects the lively hood of the lower income segment of the society. The involvement of private financial institutions in house construction venture is essential.
Chaltu on her part said that, in the past, the Commercial Bank of Ethiopia played pivotal role in financing the house construction scheme more than other institutions.
As to her, the legal introduced in the past, hampered finance institutions not to involve in financing house construction schemes. By now things are changed to the better.
In the first years of 1960s, there were Banks by their name Imperial saving and home ownership association and “saving and mortgage operation of Ethiopia,” they provided mortgage finance service to the public.
When the Ethiopian popular revolution broke out in Ethiopia in 1974GC the two institutions were confiscated and the Dergue regime later merged them as the house and saving bank and provided a mortgage service to the public.
In 1978 G.C, the bank changed its name in to “construction and business bank” and instead of financing housing projects it involves in the provision of regular banking service and later its financial capacity plummeted to the lowest level and ultimately it merged with the commercial bank of Ethiopia and the nation lost its only bank engage in financing housing projects.
The Goh Bank mainly focuses on financing house construction projects and side by side with that, it will engage in provision of the regular bank services.
As to Mulugeta, the bank in this budget year planned to collect 1.3 billion Birr in the form of saving so that enables to provide loan to customers. This year up to five branch offices will be opened in the regions including Addis Ababa and will begin business.
In the coming five years, the bank deposit annually will increase by 30 percent on average.
As to the Bank President in the coming five to six years the bank strives to raise its paid capital up to five billion birr and the bank loaning capacity expected to reach to 6.4 billion Birr.
The Goh housing bank though similar to other banks has no enormous branch offices, in the coming five years it will open up to 60 branch offices.
When the bank joined the banking industry as sole mortgage bank, it had 1.1 billion Birr signed and 521.5 million Birr paid capital.
As it is known the population growth in the city is enhancing from time to time. The growth is characterized by natural birth and migration from rural to urban areas.
Due to violence instigated by the Junta and its proxies in the various parts of the country people leave their residential places and come to the city. This again put pressure on the available infrastructures including residential houses. Since long ago the government aggressively tried to construct houses in the urban centers but it was unable to meet the growing demand.
The involvement of the private bank in the house construction and supplying to customers through mortgage system further strengthen the government efforts.
The well coming of the city administration such endeavor also supports the mitigation efforts of house shortages.
As the nation currently is facing hardship due to war, everything should not let to be done by the government rather it needs the support of the private sector and the non-governmental organizations and in such a way strengthening public private partnership will be realized.
BY ABEBE WOLDE GIORGIS
THE ETHIOPIAN HERALD NOVEMBEBER 16/2021
