Fortune News | Aug 21,2021
Awash Insurance plans to erect a new headquarters building in Addis Abeba's financial district of the Senga Tera area, marking the second project of such purpose.
Awash has acquired a 3,870sqm of land in Lideta District, leased two years ago, to finance the construction of a 30-storey building. It will house its corporate offices, conference rooms, and five basement levels.
With 754.9 million Br in paid-up capital, the 25-year-old company is one of the industry's highest capitalised private insurance firms.
The company's executives are preparing to select an architect through a design competition next week, disclosed Wondemagegne Zewedu, the building project manager. Awash managers say they will emphasise the quality selection process more than they worry about construction costs. The winner of the design competition will be announced in three months, according to Wondemagegn.
“The design work and the preparation up to construction stage are expected to take one year at the most," said Wondemagege.
The construction work of the new building is projected to be finalised in the next four years, disclosed the Manager.
When completed, the building will be the second property to serve as a headquarters for Awash Insurance. In 2010, the insurer and Awash Bank inaugurated 18-storey twin towers on Ras Abebe Aregay Street, behind the National Theater. The twin towers serve as headquarters for both financial institutions. Awash Bank recently unveiled plans to build a 50-storey skyscraper at a projected cost of 12 billion Br. The Bank is in the process of acquiring land from the City Administration.
Awash Insurance's new headquarters is hoped to address the shortage of working space created due to the lodging of most employees under one roof, Gudissa Legesse, CEO of Awash Insurance, told Fortune. The firm employs 608 people, spread across 51 branches and eight contact offices.
Awash's executives declined to disclose the projected cost for the building. However, industry insiders say the investment required for structural works could be well over four billion Birr. A directive from the National Bank of Ethiopia (NBE) limits insurers to investing less than 10pc of their total assets on the construction or acquisition of real estate. Awash’s total assets reached 3.6 billion Br last year.
A consultant in the insurance industry says a significant investment may expose the company to higher financial risks.
“The firm should be careful not to endanger the safety of its investments," said the consultant.
Awash's senior management is aware of the risks involved.
“We'll find alternative sources of financing,” said Gudissa.
Those involved in the construction industry warn that there are other factors to consider as well. This is not the ideal time to embark on massive construction projects, according to Addis Mideksa, manager of AMG Construction, who has worked as a contractor for a decade. The soaring costs of construction materials will have a significant effect on the project, and it would be wiser to wait until things return to normal.
Over the past few years, construction inputs have seen prices skyrocket. From aluminium and rebar to finishing materials and cement, prices have doubled or tripled over the past two years. The depreciation of the Birr against major currencies fuelled the crisis, while supply chain issues and COVID-19 caused the escalation of prices.
Wondemagegne, however, says the company is prepared to deal with these.
PUBLISHED ON Nov 20,2021 [ VOL 22 , NO 1125]
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