A dream of affordable homeownership has dissolved into a courtroom showdown for hundreds of Ethiopians, as 236 people filed a class-action lawsuit against Key Housing Finance Solutions and Bunna Insurance Company.

In a legal complaint submitted at the Lideta Division of the Federal High Court in June, the plaintiffs allege that the companies failed to deliver on their promises, breaking contracts and causing the loss of over 29 million Br in collective payments. The dispute resulted in an ambitious scheme launched by Key Housing Finance Solutions, a company managed by Girum Assefa, a businessman also known for his involvement with Abbay TV. The company made headlines with its bold plan to build 100,000 homes over 10 years for low- and middle-income buyers, relying on a group-based savings model it called the KEY Common Housing Fund.

Enticed by the promise of a new path to homeownership, the plaintiffs signed 30-year contracts and made regular monthly payments, expecting to receive homes within a 10-year period.

The plaintiffs’ case depended on the collapse of a financial safety net that initially convinced them to sign up. Their contracts were backed by a performance guarantee from Bunna Insurance, a policy for which each member paid extra, believing it would secure their contributions if the housing project ran into trouble. That foundation was pulled away when the National Bank of Ethiopia (NBE) decided that the guarantee Bunna Insurance provided was not legally valid.

Bunna Insurance withdrew its coverage, leaving the members’ money unprotected.

According to the lawsuit, this was a turning point. The plaintiffs, represented by Mulugeta Belay Law Office, claim the withdrawal amounted to a fundamental breach of contract. Key Housing later secured different coverage from the state-owned Ethiopian Insurance Company (EIC), but it was for mortgage and accident insurance, terms the plaintiffs disputed as irrelevant to their initial agreement. They argue that the new insurance cannot replace the initial performance guarantee, which was intended to protect their principal investment in the event that the company failed to deliver the promised homes.