Major Challenges of Accessing Housing Project Finance in Addis Ababa

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Addis Ababa University


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.



Accessing Housing Project Finance