Company to involve foreign investors to address financial gaps
Addis Prefab Houses Manufacturing Industries Share Company, which is introducing light steel housing solutions to the Ethiopian market, is facing fierce criticism
from shareholders who it promised to deliver cheap and quickly built accommodation, The Reporter has learnt.
The shareholders, who are also home buyers, have expressed disappointment over the company's failure to deliver houses in just three months or less. Close to 600 house buyers paid upfront to secure one as per the assurances of the company. However, a year-and-a-half later, Addis Prefab is far from being able to deliver.
According to Fikremariam Alemu, chief executive officer (CEO) and founder of Addis Prefab, the financial gap and bank loans caused the construction of the houses to be delayed. He said that it took over a year to get banks to finance the project. Including the Commercial Bank of Ethiopia (CBE), Fikremariam said, none of the private banks dared to provide a loan. The company also failed to convince the government to provide guarantees for external loans.
"We were totally dependent on bank loans to invest in the project. Unfortunately not a single bank was willing to finance our housing solutions," he said.
However, Fikremariam argues that the newly established share company has achieved a great deal in a short time, against the odds. The company is owned by some 866 shareholders, with 37 million birr in assets. Close to 600 people have paid out some 72 million birr to own a prefabricated house, made from calcium silicate board and light steel structures.
This type of housing is a new approach in the country. According to Fikremariam, one of the reasons why banks did not finance the company is that they doubted the marketability, while other banks apparently did not have the money to lend.
To appease the shareholders, the company has come up with the idea that each one has to increase their investment, seeking to raise an additional 200 million birr. If this tactic does not work, Addis Prefab will turn to foreign companies to help. The CEO hopes to raise 400 million birr in the upcoming three months, yet some house buyers have started to withdraw their initial deposits.
The shareholders ill feeling is fueled by the findings of an auditor, who reported that close to a three million birr in transactions is misplaced and unsubstantiated by documents. To make things worse, some 20 million birr is reported as missing. The company was found to have close to one million birr in paid up capital, in contrast with the amount registered in the share capital account.