Major Challenges of Accessing Housing Project Finance in Addis Ababa
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Date
2015-11
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Addis Ababa University
Abstract
In developing countries among important factors influencing housing provision, finance is one of the
most critical. This is the case with Ethiopia and in particular in Addis Ababa City Administration. The
research objectives include the examination of the factors affecting access to long-term housing finance
in Addis Ababa. The study also examines major policy and practical challenges facing the housing
development projects in accessing long-term housing project finance. The methodology employed by the
research includes the collection of primary and secondary data. In-depth interview was made with
senior government officials from the National Bureau of IHDP, and bureau of the Addis Ababa City
Administration Office of the IHDP. Interview was conducted with 5 real estate developers, and 11
individual residential house builders. Interview was also conducted with loan officers from 2 CBE, 2
CBB, and 5 private banks. Data obtained were analyzed through transcribing the interview results.
Among major findings of the research include the following: that all banks in Ethiopia are highly
engaged in the provision of loans for working capital requirements and trade facilitation services,
finance for the housing project is given minimal attention, insufficient amount of fund set aside for
housing project, CBE is highly engaged in the provision of long-term finance for public projects leaving
housing projects insufficiently attended, and private banks complain about the directive of the National
Bank of Ethiopia requiring them to purchase government bond for 27% of any outstanding loan they
issue. The study suggests that the government housing finance policy should be reviewed and that
facilitates the development of housing for all income groups of citizens. In addition, banks should be
empowered in facilitating long term finance for access by key players in the sector.
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Keywords
Accessing Housing Project Finance