Ethiopia
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Goh Betoch forms subsidiary to create access to affordable housing

The one and only mortgage bank, Goh Betoch Bank, discloses formation of a subsidiary company that will manage housing developments as a pillar of its core business. The bank announced that it is going to break ground on the project at its own site.
Goh Betoch which began operations in October 2021 stated that it has embarked on a journey of housing developments in different ventures to make housing prices affordable for any prospect owner.
To attain its vision, the bank has formed a subsidiary company, to tailor to the development of houses besides different schemes that it may see appropriate.
Mulugeta Asmare, President of Goh Betoch, said that despite limitations in the current laws of the regulatory body, his bank has decided to form a subsidiary that will construct houses.

The bank which closed its maiden financial year with a positive book, disclosed that in the past one year, it provided one billion birr in loans for housing and commercial activities.
“We provided the stated amount of loans that were amassed as deposit and in part, from our own capital,” the President explained.
“To expand the loan portfolio different schemes ought to be deployed. Mortgage banks are providing long term loans and to attain that, our capital should be expanded and incremented upon from long term savings of the public who want to be part of the housing scheme. Due to that we are working strongly to attain our goal; for instance we have now doubled our capital to two billion birr which makes our total to three billion birr,” he said.
The mortgage company is also looking for other source of finance like external concessional loans sourced from local and oversea sources, “In the past years, we had local challenges but that seems to have dialed down, as a result, we are expecting to gain support from foreign financiers to boost our targets.”
Although the bank burst into the financial bubble with a commercial bank license, Goh, has put forth its recommendation and got more liberty in its mortgage banking operation beyond the directives issued by the National Bank of Ethiopia (NBE).
At the inception, the bank proposed several of its expectations from the regulatory body, to which NBE welcomed the concerns raised by the sole mortgage bank.
According to the information obtained from the Bank President, NBE has carried out a study to come up with a solution that shall support mortgage banking activities, which is crucial for the country since shelter is one of the major economic and social challenges that was neglected for almost three decades.
“They have been discussing with us, nonetheless, there are no ratified directives or laws which is crucial for specialized banking businesses like mortgage,” he explained.
“Despite the law not being issued as of yet by NBE, the regulatory body has given us more room to carry out the mortgage service; for instance the major share of our loan portfolio goes for long term loans unlike the current NBE directive,” he appreciated the understanding to the central bank.
The NBE directive No. SBB/69/2018 article 8.2 indicated that long term loans and advances that are more than five years of maturity period shall not exceed 20 percent of a bank’s total loans and advances.
However, more than 60 percent of the loan provision that Goh provided is associated with long terms loan portfolio schemes.
“There are some gaps on the regulatory body laws that allow us to operate on small capacity, but we inform NBE when we operate some unique activities,” Mulugeta said.
He explained that on the current NBE directives, banks are expected to focus on banking activity, while they are allowed to invest 10 percent of their net worth on other sectors, “We have abided by this rule and have now embarked on our operation.”
“We have established a subsidiary company that invests on the real estate sector. So far its capacity will be limited since the NBE directive has a cap but it will focus on real estate business and expand in the future,” he said.
He further stated that the bank is also under discussion with developers to work together to construct houses in different arrangements.
“Then we need significant shift from the regulatory body to attain the expected big success,” he underlined.
Currently, the bank is on the process to commence the construction of housing project at its own site around Saris, in the capital, with an attractive rate.
The President promised that similar projects will follow in the near future which are managed by its own capacity or with partners.
He reminded that the bank’s core principle was financing housing project either for individuals or developers and also in enhancing the sector capacity, “But currently, the sector is unaffordable for the general public since it is controlled by traders, who set extraordinary profit margins.To alleviate the challenge and make the price reasonable we want to be involved on the development. We have now secured a plot of land and have finalized the design work. We are engaged via the subsidiary to prove that we shall deliver houses at long terms loan provision at an affordable rate with reasonable profit points.”
“This is why we entered in to construction. The subsidiary company shall continue as a developer but our major goal will be financing the development projects,” he added.
He further said that when the regulatory body issues the relevant directive, the subsidiary shall add more business ventures that will be in alignment with the housing scheme.