Ethiopia has signed a cooperation framework with the International Finance Corporation (IFC) to establish a mortgage refinance company aimed at expanding access to housing finance and addressing liquidity constraints in the banking sector.

Prime Minister Abiy Ahmed oversaw the signing of the agreement between the National Bank of Ethiopia (NBE) and the IFC on Thursday.

The planned Mortgage Refinance Company will be capitalized at Birr 100 billion, with the IFC expected to provide a minimum contribution of USD 200 million, according to information released following the signing.

The institution is expected to operate as a wholesale mortgage refinancing entity, providing longer-term liquidity to financial institutions involved in housing finance. The initiative is intended to address liquidity mismatches within Ethiopia's banking sector while supporting wider access to mortgage financing across the country.

Prime Minister Abiy said in a social media post that the partnership represents an important step in addressing longstanding constraints in Ethiopia's housing finance market and expanding financial inclusion.

“This partnership is a critical step toward realizing our goal of delivering 1.5 million affordable, dignified homes for Ethiopian families while expanding private sector participation in our financial system,” Abiy said.

The government has identified access to housing finance as one of the challenges affecting the development of Ethiopia's housing market, particularly as banks face difficulties in providing long term mortgage loans using predominantly shorter-term deposits.

The establishment of a dedicated refinancing institution is expected to strengthen the availability of long term funding for mortgage lending and encourage greater participation by financial institutions in the housing sector.

Abiy said the initiative also forms part of Ethiopia's broader efforts to develop a modern, resilient and inclusive economy.

Source (including image): Ethiopian News Agency