Ethiopia opens door for foreign mortgage banks

The Government of Ethiopia expressed its willingness to open its banking sector for foreign banks engaged in financing housing (mortgage banks).

“Housing is very critical. Our bottleneck to solve housing problem is the banking system. It is necessary to open up the banking sector after some time. Even now if there is a bank that provides loans to housing (mortgage lenders), we have to allow it to enter the market even through it is a foreign bank,” Prime Minister of Ethiopia Abiy Ahmed said.

He made the remark during the visit last week during a discussion with his cabinet in Koisha project site, the future tourist destination in Southern Ethiopia currently under renovation. “If a bank said it is interested to work only on finance housing (mortgage), we will not close our door (deny it license) just because it is a foreign bank. This is because the housing problem is very critical issue,” he said at the meeting later televised on state broadcaster –ETV on Thursday evening.

In Ethiopia it is estimated that one million to 1.2 million houses are needed to be built annually to meet the growing demand of housing in urban cities and towns, according to Prime Minister Abiy. He indicated that it is necessary to look into making the land available for housing, bringing the bank, prepare design and address the housing problem.

Stressing that the need to address housing problem quickly, Abiy noted that if the housing issue is not solved quickly, the people of Ethiopia will be forced to live on the streets.

Banking sector has been one of the areas Ethiopia has been closing for foreign banks. After the East African country began its reform appointing Abiy Ahmed as its new Prime Minister in April 2018, several sectors including communications and logistics, among others are opened for foreign companies.

Currently companies are bidding to but minority stake in the state owned monopoly, Ethio Telecom. While many global telecom companies are also submitting their proposals to enter the market competing for the two more new telecom licenses.

Meanwhile, indicating that mobile money service is more of banking business than pure telecom service provision, the government of Ethiopia has indicated that mobile money service is only allowed to the foreign company, which partners with Ethio Telecom but not for the two new entrants.