Housing Finance in Ethiopia

Overview

This profile is also available in French here.

To download a pdf version of the full 2020 Ethiopia country profile, click here.

With a population of over 100 million people, Ethiopia is Africa’s second most populous country. The country’s economy has been rapidly growing, driven largely by the construction industry and the services sector. There have been efforts aimed at improving role of the private sector in the economy, driven through national initiatives led by the Prime Minister’s office. These include improving the ease of doing business in the country and opening up the financial sector to the global market.

The country has also been experiencing increased urbanization, the country’s urban population was 21.2 percent in 2019, with an urbanisation rate of 4.9 percent. Rapid urbanisation has outpaced urban investment needs and development of infrastructure and service delivery. This has resulted in a backlog of housing  about 1.2million houses. Majority of housing supplied in the country’s main cities has been through the Integrated Housing Development Program (IHDP), which has built about 400 000 condominiums indicating a significant housing gap. The government responded to this by introducing a 10year development masterplan set out to build 4.4million houses of which the private sector will build 80percent.

There is also a relatively substantial rental housing market, particularly in the inner cities of urban areas. Most of the rentals in the urban centres are government owned building and the subsidised houses of the lucky winners of the IHDP subsidised houses who use the rent to pay for their mortgage.

Ethiopia’s financial sector has been State controlled, limiting foreign investment. There is no capital market, and bonds are not widely traded. The main types of financial institutions particularly for construction sector are banks and micro-finance institutions. Although these have increased their reach within the country, majority of the population still relies on informal sources of credit. As part of the ongoing financial sector reforms, the Ethiopian government allowed people living in the diaspora to invest in the finance sector, buy shares, and set up lending businesses.

Find out more information on the housing finance sector of Ethiopia, including key stakeholders, important policies and housing affordability:


Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2019 edition, which has up-to-date profiles for 55 African countries.

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