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Chimphondah: The man putting Shelter Afrique’s house in order

FINANCIAL STANDARD
By Graham Kajilwa | July 27th 2021

Andrew Chimphondah.

Andrew Chimphondah is a man with a soft personality; even when he laughs, it is not a cackle.

It comes out more as a chortle, keen that he is not carried away and forgets what the conversation is about.

It is the same laugh the Shelter Afrique Managing Director gave when Financial Standard asked about his pursuit of a PhD. His resume has been reading “completing PhD” since 2019.

He was honest about it, insisting that his busy schedule had gotten in the way of completing his studies.

“My prayer is that I finish this year,” said Mr Chimphondah, a Zimbabwean national who has been at the helm of the pan-African mortgage financier since 2018.

“Because of the workload, which is not an excuse, you need to read like 100 books as part of the literature review. For that, you will need at least two full months when you are not working,” he added.

However, Chimphondah said he has made remarkable progress, with his job providing a valuable reference point for his thesis.

“What is interesting is that though the delay was not planned, I have been able to have more material to put on my thesis. I hope that this time next year when we talk, I will be able to show you where it (PhD) is hanging,” he said.

He has enrolled at the Da Vinci Institute in South Africa, with his thesis on innovative housing finance solutions for the affordable housing market, which ties well with his responsibility at Shelter Afrique, the company that seeks to help governments in the continent provide affordable housing.

Chimphondah is a chartered accountant with membership to both the Institute of Chartered Accountants of Zimbabwe and the South African Institute of Chartered Accountants.

He also holds a Masters Degree in International Finance. 

Before joining Shelter Afrique, Chimphondah worked with Housing Investment Partners (HiP) in South Africa.

He also served as the managing executive for National Housing Corporation (South Africa) and an executive at both ABSA and Standard Bank where he managed home loans.

Shelter Afrique is owned by 44 African governments, the African Development Bank (Afdb) and the Africa Reinsurance Company. When he took over, Shelter Afrique was struggling, riddled with poor financial performance and integrity issues.

His predecessor, James Mugerwa, had left the company acrimoniously following an audit that showed the company had restructured overdue loans by making them appear as performing, in what was meant to surpress the volume of toxic mortgages. 

Trouble at the housing lender started to emerge in January 2017 following revelations that at least 59 per cent of its Sh24.63 billion loan book was classified as non-performing.

This was almost three-quarters of the company’s loan book.

An audit of its operations by consultancy firm Deloitte found that the Shelter Afrique management at the time had been restructuring overdue loans by deferring them and making them appear as performing loans.

This was meant to cover up for the growing level of toxic loans.

The forensic audit also found that the lender had been borrowing to pay debt rather than finance new investments.

It is against this backdrop that Chimphondah was appointed at the end of 2018 to get the firm out of the red.

“When you have non-performing loans, you learn from that. The first thing we did was review the credit policy and lending criteria. The second thing when you lend, as a financial institution, you do not take up 100 per cent of the loan. So when we lend, we try to share risk with other institutions such as banks... such that we kind of diversify the risk,” he said.

The company also completed stalled projects and sold them off at a discount.

“We collected in excess of Sh3.79 billion,” said Chimphondah. 

This was done through a special business unit created under the office of the chief operating officer.

Chimphondah said the company also took insurance against the loans issued to cushion themselves against default.

This restructuring also saw Shelter Afrique stop lending to “just any developer.”

“Instead of just lending to small developers like we were doing in the past, we said let us lend to established (counterparties) who have strong balance sheet because, at the end of the day, we have big deliverables,” he said.

“This way, we reduced our risk. You cannot eliminate it, but it is better compared to lending to people with no strong balance sheet.” In March 2021, the company announced a return to profitability for the 2020 financial year, with total income increasing to Sh196 million compared to a Sh134 million loss in 2019.

Chimphondah said when he took office, he engaged all the shareholders and lenders in a bid to restructure the debts and improve shareholders’ confidence.

The company owed Sh11 billion to six financial institutions among them German Development Bank (KfW), Ghana International Bank, and the European Investment Bank.

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