The Nairobi-based Pan African housing and urban development financier Shelter Afrique recently raised Sh2.5 billion from the debt market to finance housing development. Finance Director Karen Kandie talked to JOHN OYUKE on the plans to deepen credit to provision to local property developers. Excerpts:
Q: Shelter Afrique recently successfully listed Sh2.5 billion three-year housing bond on the Nairobi Securities Exchange to help to fund construction of housing projects. What have you done so far with the proceeds?
A: We have substantially disbursed the bond proceeds, with 60 per cent already utilised for the earmarked projects. We expect all the funds to have been utilised by the first half of this year. The plan was to use the proceeds to finance a number of residential development projects with an estimated cost of Sh9.4 billion.
Where are the projects located, and which ones have been actualised?
The projects are located in Nairobi, Mombasa and Kisumu. Ten projects have been actualised with two waiting to drawdown (obtain financing according to construction expenditures). High borrowing interest rates have been seen a setback but we expect the projects to kickoff by the first quarter of this year.
Though regulations allow us to invest up to 20 per cent of our portfolio in commercial projects, most of the projects are mainly residential houses.
Has Shelter Afrique scaled up its operations to respond to the massive demand for houses in member countries?
Yes. This year will see an increase in the level of loan approvals by Shelter Afrique. We expect to approve financing worth up to $140 million up from $100 million last year. As usual, a significant proportion of the projects we are financing will be targeted at low to middle income earners in Kenya and other member countries. The institution is no doubt a major player in the local housing sector and provision of affordable middle-income housing.
How many projects has it implemented in Kenya and what is their total value?
Shelter Afrique has implemented more than 100 projects in the country, amounting to about $129 million (Sh11.6 billion). The projections are that an additional $7.5 million will be disbursed in the local market in the next three years.
The institution has been seeking partnership arrangements and opportunities with financial institutions as part of its mandate to mobilise additional resources for housing development in Africa.
How many of such partnerships have been entered into in Kenya in the last five years?
In Kenya, we are particularly in close partnership with Housing Finance whose sole mandate is closely linked with that of Shelter Afrique for joint project financing. We also work closely with CfC Stanbic group for bond issuance in the local market. Several financial institutions such as Kenya Commercial Bank, Cooperative Bank, Bank of Africa and Family Finance have also provided additional resources. Of course we have other investors such as pension funds that have invested in the vision and value proposition of Shelter Afrique.
What is the membership of the organisation?
The current membership of Shelter Afrique comprise of 43 African governments, with the African Development Bank and Africa Reinsurance Corporation as institutional shareholders.
Ghana is the latest government to subscribe last year with an amount of $10 million, which amounts to shareholding of 8.5 per cent of the paid up capital. This makes it — Ghana — the third largest sovereign shareholder after Kenya, Nigeria with 12 per cent and 10.4 per cent respectively as at December 31 last year. Our largest shareholder remains African Development Bank with a shareholding of 20 per cent.
Shelter Afrique has been in negotiations that could led to the Chinese government buying a stake. How have the negotiations gone?
We expect the negotiations to both attract China as a Government and also institutions in China as category B (institutional) shareholders to be finalised soon. As you are aware, the sovereign membership is currently open to African Countries and admission of China as a country involves an amendment of the charter.
