By our staff reporter

Ethiopia’s mortgage pioneering bank, Goh Betoch, signals that it’s searching for provisions in government policies to realize its goal.

The bank, which is steered by well-known banker, Mulugeta Asmare, President of Goh, and Getahun Nana, a former vice governor of the central bank, in his capacity as Chairperson of the Board of Directors, announced that the financial firm has been asking the government to establish the necessary regulatory framework which is currently lacking, for mortgage banking.

According to the bank’s officials, in the annual report on the second general assembly that took place a week ago, the government needs to give a directive to help the housing industry, which is a major concern for the nation’s residents.

Mulugeta, who is the founding President of Goh which began operations in late 2021, stated in the financial report that, “However, it is worth noting that our operations have been severely affected by insufficient laws and by the absence of a conducive environment for mortgage banking.”

In an effort to create an atmosphere that would enable the bank to process mortgages efficiently, the bank has submitted many comprehensive suggestions to the appropriate government authorities.

Nonetheless, the bank stated in its annual report, which was closed on June 30, that the majority of its operations are focused on housing schemes. For example, during the time under review, about half of the loans and advances were used to fund housing initiatives.

According to the report, the bank had 1.32 billion birr in total outstanding loans and advances at the end of the 2022/23 financial year, up 1 billion birr, or 342 percent, from the year before.

Of the total, 49.2 percent of the loan portfolio was allocated to mortgages, with foreign trade accounting for the remaining 35.5 percent.

Although the recently formed bank’s earnings for the year is lower than it was the year before, it has achieved amazing feats in other key areas of performance.

The bank raised around 912 million birr for the year, which is a 255.3 percent increase over the 256 million deposit mobilization in the 2021/22 fiscal year.

To reach 21,932, the number of deposit accounts has grown by 16,908 or 336.6 percent as the report indicated.

According to the annual report, “regular deposit accounts for 17.5 percent of the total deposit, while commitment savings for mortgage loans account for 70.2 percent.” In terms of earnings, the bank had an almost 75 percent increase to 212.6 million birr.

The bank’s assets have increased by more than a double this year, totaling 2.63 billion birr. This new bank asset has increased by 117.4 percent, or 1.39 billion birr, in a single year, according to the annual report.

Total assets consist of investment securities, loans and advances, and cash and bank balances, making up 77 percent of the assets; the remaining 23 percent are all other assets.

Profit before tax for the reviewed financial year was 6.4 million birr, a 19 percent decrease from the previous year.

The report stated, “Investments made on branch expansion, technology, increases in depreciation and amortization expenses and deployment of other relevant resources are mainly attributed due to the decline in profit from the previous same period.” There are now nine branches after five of them became active during the given period.

Throughout the year, the bank has engaged in a variety of operations, such as acquiring a parcel of property and creating a subsidiary that would work in the mortgage industry, a crucial area of business for the financial institution.

The President stated, “In addition to establishing a company, a real-estate developer, in which the bank is a significant shareholder, a strategic partnership has been formed with various stakeholders to secure loanable funds.”

Ahadu Bank, one of the largest private banks that recently joined Ethiopia’s financial industry reveals that it has managed to collect more than 2 billion birr in deposits with more than 21.6 million dollars in foreign currency generated, under one year.

The bank which was established with more than 10,000 shareholders in its 2nd regular general meeting with shareholders on December 2, 2023, through Anteneh Sebsebie, board of director’s chair, attributed the bank’s recent success to heavy investment on various infrastructure that lured in profits to the firm.

According to the bank’s CEO, Sefialem Liben, “The bank has overcome certain challenges and has now opened 75 branches providing services to over 200,000 customers through branches and digital technology.”

The bank is working together with microfinance, savings and loan associations as well as financial technology institutions to make wealth collected accessible to many.

At the annual meeting, new board members were elected to manage the bank in its next phase of operations for the next three years.

The African Development Bank has revised its short to medium-term macroeconomic forecast for Africa, for 2023 and 2024 downwards to 3.4% and 3.8%, from 4.0% and 4.3%.

The slightly lower figures reflect the persistent long-term effects of COVID-19, geopolitical tensions and conflicts, climate shocks, a global economic slowdown, and limited fiscal space for African governments to adequately respond to shocks and sustain post-pandemic economic recovery gains.
The updated data were published on Thursday, in the 2023 Africa’s Macroeconomic Performance and Outlook (MEO) update, a follow-up to the Bank Group’s 2023 Africa Economic Outlook released in May.
While inflationary pressures are receding globally, they are persistent in Africa and continue to weigh heavily on the continent’s short-to-medium-term economic performance, according to the update. Africa’s inflation is now projected to average 18.5% and 17.1% in 2023 and 2024, respectively.
The Bank Group’s Chief Economist and Vice President, Prof. Kevin Urama said “The challenging global economic environment and multiple shocks continue to shape Africa’s macroeconomic performance. The entrenched inflationary pressures threaten to reverse all the macroeconomic gains made since the easing of pandemic risks while the continued depreciation of domestic currencies in many countries has exacerbated debt service costs.”
“In the face of regional and global shocks, the Bank remains resolute in supporting African countries to better navigate these challenges and put economic growth back on track,” he added.  
In the short term, the MEO update urges countries to continue to implement restrictive monetary policies to contain inflation. This should be supported by fiscal policies that promote economic diversification and remove supply-side constraints.
Over the medium- to long-term, it calls on governments to scale up efficient investment in human capital and physical infrastructure to boost productivity, regain momentum in economic growth, and create opportunities for more inclusive and sustainable development.
The revised inflation rates represent an acceleration of 3.4 and 7.6 percentage points, respectively, from the earlier projection. Ongoing inflationary pressure has largely been fuelled by supply shocks in agriculture, stronger imported inflation due to weaker local currencies, relatively high commodity prices, and the persistence of fiscal dominance in several African countries.
The elevation of cost-of-living pressures has eroded Africans’ purchasing power, stoking the risk of further increases in the incidence of poverty.
Among the update’s findings: slow global economic growth is impacting demand for Africa’s exports, a trend that is projected to persist for much longer than previously anticipated.
It also stressed that the projected economic slowdown in advanced economies and lacklustre growth in China relative to historical trends have weighed down global growth.
“This has placed additional strain on African countries, especially those dependent on the Chinese market for commodity exports. Stronger policy support in China could bolster global economic recovery and trigger positive spillovers to African countries for which China remains a major trading partner. These factors can help moderate adverse risks to the economic outlook,” the report notes.

On the downside, the 2023 MEO update observes that climate shocks coupled with deepening geopolitical tensions in the Middle East and the prolongation of Russia’s invasion of Ukraine could lead to deeper disruptions in global trade and foreign investment flows. This can trigger another round of prolonged tightening of global financial conditions that could further exert depreciation pressure on domestic currencies, increase debt-service costs, and exacerbate the increase in debt service costs and compound the continent’s funding squeeze.

Staying afloat amid local and global shocks

The MEO update notes that coordinated monetary and fiscal policies underpinned by a reduction in fiscal dominance will be essential to rebuild buffers against the shocks.
Targeted and sequenced investments to address supply constraints, including addressing structural weaknesses, would help reverse the downturn in the momentum of economic recovery and put African economies on a higher and more sustainable growth trajectory.
To sustainably reduce inflationary pressures, the report urged African countries to remove the obstacles preventing domestic supply from responding to higher international commodity prices and to boost labour productivity through targeted infrastructure and human capital investment.
Tackling impediments to increased domestic resource mobilisation will help address the current funding squeeze.
Launched in January 2023, Africa’s Macroeconomic Performance and Outlook report complements the African Development Bank’s annual African Economic Outlook report, which focuses on key emerging policy issues relevant to the continent’s development. The MEO is published in the first and fourth quarters of each year; the update comes ahead of the 2024 edition of the MEO, which highlights the evolution of macroeconomic conditions in the face of multiple and unprecedented shocks.