Mayor Adanech Abiebie is contemplating inking a deal with private commercial banks to build real-estate projects through public-private partnerships with hopes of addressing the chronic housing demand.

The project office for public-private partnership was established a couple of months ago to involve the private sector in the city's upcoming projects. It has prepared close to 75hct of land in the centre and outskirts of the capital, while its officials are now pushing the banks to finance the construction within two years. They want to see the banks cover 70pc of the cost to their staff or prospective homebuyers while the rest is allocated to the Administration.

According to Jarso Golisa, director of the project office, the City Administration has decided to partner with banks with hopes that involving the sources of loans for projects can ease the housing problem while giving priority to their employees. He said that providing living space in one area is advantageous to the corporates, while their employees' former spaces will be left for residents that have registered for condominiums.

Out of the estimated over five million residents of the capital, nearly half a million have registered for condominiums in the decade beginning in 2005. Spending close to 10 billion Br every year on housing projects, the City Administration planned to build 300,000 houses.

Wegagen Bank is among the six private commercial banks that responded to the City Administration's request three weeks ago, planning to submit a proposal to the project office in 20 days. The Bank showed interest in building affordable housing for its staff while providing loans for homebuyers and developers. As a pilot program, Wegagen Bank is planning to provide housing for employees and considers affordability, comparing borrowing ability, according to Hussien Amdie, vice president for credit.

Authorities in the City Administration are keen to see banks permitted to incorporate subsidiary real estate companies. For Hussien, that will require banks to have a large budget and amended policies.

"We'll take it as a long-term plan,'' he said.

Hibert Bank has also submitted a proposal. The President, Melaku Kebede, believes the project is "sound and promising", although he foresees the implementation might take time.

Investment and financial experts echo the push for changes in policy and regulation to govern the relationship between the banks and the City Administration.

Yoseph Getachew, chief of RiseAddis Investment Advisory, worked as a financial advisor for Zemen Bank. He agreed that the idea is "catchy", with mandatory preparation to be done before implementation. The banks' failure, with no track record of financing long-term investment projects, would be a direct hit on the economy. He urged the central bank to prepare for the risks.