Goh Betoch Bank a new financial institution that aims to introduce mortgage banking offers its shares to the public in Ethiopia.
Getahun Nana, the former VP of the central bank of Ethiopia, who is now one of the founding members of Goh Betoch Bank said: “Currently there are 1.2 million housing shortages in Ethiopia.” He added that Ethiopia needs to provide additional houses every year in order to meet the growing demand for housing that is why they have introduced the bank to provide loans for housing construction.
Getahum said that only less than 4% of the loans in Ethiopia goes to housing construction for both real estate developers and individuals as he briefed potential investors to the new bank.
Eng. Aisha Mohammed, Minister of Ministry of Construction and Urban Development of Ethiopia, 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.
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According to Mr. Eshetu Fantaye who represented the prospects of the new financial institution, he said that when Goh Betoch Bank starts operating next year its aim will be to invest one billion in housing development projects in the country.
He further added that the bank targets to invest around $2.4 million per year in housing development during the fifth year of its operation. He said that the return on Investment of Goh Betoch Bank is foreseen to be 32% after five years with a profit of around $1.7million.
In Mr. Eshetu’s presentation, he indicated that most of the African countries cannot allocate 1% of their GDP on housing development while others like Europe spends 60% on average of its GDP.
For a new bank to enter Ethiopian market, it has to be in a position to raise a minimum initial capital of around $17 million of which one shareholder is not allowed to own more than 5% of the total capital.
There are currently close to 20 operational banks in Ethiopia several others are under formation. Banking in Ethiopia is a profitable business with a stable Return Of investment ranging from 20% to 40 %.