To accommodate its ever-growing population and rapid urbanization, Ethiopia needs to build, and build fast. A 2019 forecast from the World Bank suggested the country requires a staggering 471,000 housing units each year. In Addis Ababa, city planners project a need for over a million new apartments by 2036 just to keep pace.
The endless construction in the capital and explosion in the number of real estate developers suggests that meeting this target is not attainable. However, any questions about capacity are dwarfed by concerns surrounding sustainability, affordability, and access to finance.
Experts like Zegeye Chernet (PhD), an architect lecturing at Addis Ababa University and founder of ADUS Architecture and Engineering PLC, attribute the nation’s most pressing housing challenge to rapid, uncontrolled urbanization.
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He characterizes this process as an “urban explosion” or an “avalanche,” noting that the sheer speed of migration and growth is outpacing the capacity of existing systems, thereby deepening the housing deficit.
Zegeye observes the skyrocketing price of urban land and the rising costs of construction materials and machinery are major drivers of this shortage. He suggests that these issues are compounded by the fact that the government retains ownership and centralized control over land, while governance and institutional shortcomings, including inconsistent policy implementation and bureaucratic inefficiencies, continue to exacerbate the problem.
Historically, the government has been the primary provider of housing for low- and middle-income earners. Meanwhile, private developers have largely ignored the broader community, instead targeting the diaspora and other high earners.
Combined with a lack of access to finance for housing, the majority of low-income and even middle-income households, such as civil servants and professionals like health workers and teachers (who once enjoyed prestige), today live in inadequate or tightly-packed homes.
The government has attempted to ease this burden, particularly in urban areas, through comprehensive plans and housing programs such as Kebele housing and the Integrated Housing Development Programme (IHDP).
Despite this, the housing shortage remains unresolved in Addis Ababa elsewhere, with the most socio-economically vulnerable segments of society bearing the brunt of the consequences.
Housing Finance: The Unreachable Dream for Many
Housing finance is a critical sector where Public-Private Partnerships (PPPs) can effectively collaborate to bridge existing gaps and alleviate housing shortages. However, various studies indicate that housing finance in Ethiopia remains inaccessible to the majority of households.
Currently, only high-income groups and those employed in the financial sector have the opportunity to secure housing loans from the few commercial banks operating in the country. For the rest of the population, access to finance is hindered by several major constraints, including low income levels, high interest rates, skyrocketing house prices, and persistent inflation.
Prohibitive down payments required by lenders, a lack of acceptable collateral, high monthly installment payments, and limited access to land for house construction are the other barriers preventing most households from entering the mortgage market.
To those in the finance sector, the government’s outsized role in housing is no longer sustainable. The consensus among experts is that the state should transition from a “builder” to an “enabler,” fostering a market where private and specialized financial institutions can serve a wider demographic.
“The government cannot continue building houses. That is not a practical approach, as global experience has shown,” argues Eshetu Fantaye, a founder of Goh Betoch Bank who played a key role in the bank’s initial feasibility study.
Mortgage: Prematurely Aborted Housing Solutions in Today’s Ethiopia
Half a century ago, the concept of mortgage financing took root in Ethiopia, leaving behind “living witnesses” in the form of iconic housing developments. Examples include Bole Homes near the international airport and various structures in Merkato, such as the Merab Hotel. However, this momentum vanished following the rise of the socialist Derg regime, which nationalized property.
During that era, only the state-owned Housing and Saving Bank (HSB) remained.
It took nearly fifty years for the specialized mortgage concept to re-emerge in the Ethiopian financial landscape. On October 25, 2021, Goh Betoch Bank was launched by a group of industry veterans, many of whom had served as presidents of various local commercial banks.
The bank was dedicated to housing finance, led by Mulugeta Asmare as President and Getahun Nana, a former Vice Governor of the National Bank of Ethiopia, as Chairperson.
When the bank commenced operations, Getahun highlighted the severe disparity between housing demand and supply. He designated the housing crisis a national priority, citing an accumulated shortage of 1.2 million units.
“The reality is that existing financial firms are not providing the necessary funds for the housing and construction sectors,” Getahun stated. “We were formed to fill that gap.”
In April 2022, Mulugeta Asmare, former president of Goh Betoch Bank, reaffirmed at the time that this singular focus in an interview with The Reporter. When asked if the bank was drifting toward commercial services, he was emphatic:
“The bank purely provides mortgage services. We are registered with the National Bank as a mortgage service provider—the first of our kind in Ethiopia. We have not provided any commercial loans to businesses; we only lend to customers looking to purchase a home.”
The current CEO, Girum Tsegaye, holds a perspective that contrasts sharply with his predecessor. Girum clarifies that the bank’s legal foundation was never strictly mortgage-based:
“To be clear, there has never been a [dedicated] mortgage bank in Ethiopia. From the very beginning, our license was for commercial banking. While the founders before my time ambitiously hoped to provide housing finance and help the public while generating profit, the license itself has been commercial since day one,” Girum explained.
Selam Bank was another ambitious project, promoted with significant fanfare by prominent figures such as Bethlehem Tilahun, founder of soleRebels. Despite high expectations for it to become a standalone mortgage powerhouse, the bank failed to launch independently. Ultimately, the nascent institution was absorbed by Goh Betoch, consolidating its shareholders into Ethiopia’s pioneering private mortgage venture.
Today, even Goh Betoch Bank appears to be struggling to maintain its original vision. In reality, the bank never held a specific “mortgage banking license,” as that regulatory category does not yet exist in Ethiopia.
“Our strategy was to offer mortgage products through a standard commercial banking framework,” one founder conceded to The Reporter.
Annual reports from Goh Betoch Bank reveal a documented shift in strategy from one fiscal year to the next. The most compelling evidence of this shift is found in the bank’s loan portfolio breakdown.
During its inaugural year, lending was almost exclusively focused on housing-related sectors. However, by 2025, the share of “Building and Construction”—which encompasses mortgage lending—shrunk significantly in favor of commercial loan.
Specifically, income from domestic trade and services at the bank surged from 3.6 percent of the total in 2022/23 to 21 percent in just three years. And while construction remains its largest income stream, it accounted for just 47 percent of the portfolio in 2024/25, down from 60 percent the year prior.
In its latest annual report, Goh’s executives explicitly noted that it is “strategically diversifying its loan portfolio to include non-mortgage sectors” to ensure financial sustainability.
The Short-Termism Trap
By their very nature, housing loans require long-term capital. For a bank to offer a twenty-year mortgage, it must have access to sustained funding of a similar duration. Theoretically, the most appropriate and preferred approach—one adopted by many countries—is granting mortgage banks access to national pension funds. In some jurisdictions, insurance premiums are also deposited with mortgage banks to create a stable pool of capital for long-term housing demands.
The organizers of Goh Betoch Bank were ambitious, exploring various global models to secure such partnerships. One such model was Employee-Assisted Housing Finance, which utilizes an employee’s pension deposits as initial equity for a home purchase.
However, these proposals were met with significant institutional resistance.
“It was rejected,” Eshetu told The Reporter Magazine. “Proposed innovations often encounter resistance due to perceived conflicts of interest with the Commercial Bank of Ethiopia. Proposals are typically rejected whenever they are deemed to impact CBE’s commercial interests.”
Girum, current Goh president, recalls that the initial efforts were thwarted by a combination of domestic and external factors.
“We could not secure any pension funds or insurance premiums. Furthermore, as the country was embroiled in war, obtaining foreign loans was impossible—not just for us, but for the government as well,” he explained. “Due to these factors, our assumptions regarding long-term funds failed. Consequently, our ambition to provide mortgage services and long-term housing loans also failed.”
Organizers also looked toward Savings and Credit Cooperative Organizations (SACCOs), which often maintain large cash reserves that lose value due to inflation and currency depreciation.
Goh Betoch proposed that through partnership, SACCOs could convert idle Birr into physical assets. Yet, this proposal also led nowhere.
In developing nations, a third common source for long-term funding is the World Bank, which provides housing loans with tenures of up to 40 years at very low interest rates. When this, too, failed to materialize for Goh Betoch, the bank found itself at a crossroads, forced to revisit its founding vision.
Girum maintains the bank made every effort to fulfill its original ambitions during its first eighteen months of operation. However, after failing to secure the long-term funding the founders had initially anticipated, the bank was forced to pivot.
Consequently, it shifted away from its goal of providing specialized mortgage services and transitioned into a fully commercial bank shortly after its establishment, with its executives citing a lack of sufficient liquidity to sustain a pure housing-finance model.
“As long as we lack access to long-term funds, a true mortgage bank cannot exist in this country,” said the President.
The Prospect of Mortgages in Ethiopia
Drawing on four years of experience at Goh Betoch Bank, Girum noted that mortgage lending in Ethiopia has shown strong repayment performance and relatively low exposure to irrecoverable loans.
“What I have observed over the past four years is that housing loans have remained largely protected from the risk of becoming irrecoverable,” he said. He underscored that most borrowers treat housing loans as a fixed monthly obligation, repaying them consistently from their salaries like any other essential expense.
Girum concluded that, with sustained government support and access to long-term financing, Ethiopia’s mortgage market holds significant promise. Given the encouraging repayment culture among borrowers and the country’s growing demand for housing, he sees mortgage banks could play a pivotal role in addressing the nation’s pressing housing challenges while offering viable investment opportunities.
But, as of now, the key word remains could.
The equation is simple: without long-term funds, there are no long-term housing loans and, consequently, no viable mortgage banks. The primary obstacle hindering mortgage banking in Ethiopia today is the systemic unavailability of long-term capital.
So how can this pressing social issue be resolved?
Banking veterans like Eshetu argue that without an established mortgage systems and legal institutional foundations in the government structure, mortgage banking is nearly impossible to realize in Ethiopia, while others like Girum suggest several solutions based on successful international models.
In nations such as Nigeria and South Africa, the government establishes a centralized long-term housing fund. This vehicle aggregates capital from diverse sources, including portions of national pension funds, allocations from government revenue, and various smaller institutional deposits.
By pooling these resources into a single, government-backed entity, a massive reservoir of capital is created. This fund is then distributed to mortgage banks nationwide, enabling them to provide sufficient long-term housing loans to the public.
“This is the standard approach applied globally,” explained Girum, noting that discussions on creating a similar national housing fund for Ethiopia are ongoing.
