The African Development Bank has announced the disbursement of an equity investment of over Sh2.9 billion (US $28.2 million) in Shelter Afrique.
The company, which is owned by 44 African countries, together with the African Development Bank and African Reinsurance Corporation as shareholders, is a development finance institution investing in affordable housing for Africa. The raise in equity was given a nod on February 1 this year.
The bank announced on February 14 that it is also arranging for an immediate loan of Sh2.07 billion (US$20 million) to the company to consolidate the position of the housing specialist for 2017 and beyond.
“These new resources show that the African Development Bank is fully committed to the growth and development of Shelter Afrique, which plays a vital and unique role in the development of affordable housing across Africa. Affordable housing is a key issue at the heart of the High 5 priorities for our Bank, namely ‘Improve the quality of life for the people of Africa,” said Gabriel Negatu, Director General at AfDB’s East Africa Regional Development and Business Delivery Office.
“At the same time, the African Development Bank takes issues of governance seriously. With the strong measures taken by Shelter Afrique to improve its governance and the support of its shareholders, the company can move to the next stage of its development,” he added.
The African Development Bank participated in Shelter Afrique’s Extraordinary General Meeting which was held on January 31, this year in Nairobi.
At the EGM, shareholders present unanimously resolved to pay up their share capital commitments of approximately Sh12 billion (US$116 million) as soon as possible or to face temporary suspension from membership if not done by the end of 2017.
With additional equity support, Shelter Afrique will be in a stronger position to finance an increasing number of projects whether directly or indirectly.
Shelter Afrique has recently been the subject of press speculation of overstated asset quality and substandard management operations. Following those allegations, the Board of Directors of Shelter Afrique took immediate steps and appointed a reputable firm to conduct an independent forensic audit.
That investigation concluded on January 2 this year and recommended improvements in policy and processes which will be implemented by Shelter Afrique.
Shelter Afrique has announced that it will fundamentally improve its governance structure. Several interim executive managers are being contracted by Shelter Afrique’s Board to improve financial management and governance.
The Board of Shelter Afrique will also take appropriate disciplinary actions to address the irregularities and shortcomings identified in the forensic audit report, the Bank said.
The shareholders also agreed to expand the shareholder base to include African and non-African impact investors this year and take Shelter Afrique to the next stage of its development, it added.
The African Development Bank intends to work with Shelter Afrique’s management and Board to support the company with technical and business development assistance throughout 2017.
Improving the quality of life for the people of Africa is one of the High 5 Priorities set by the Bank in 2015.
In a press release, the bank noted that Africa’s economic growth has not been rapid or inclusive enough to create enough jobs and improve quality of life.
It, however, said it is committed to building up the availability of technical skills so that African economies can realise their full potential in high-technology sectors.
“Acknowledging the urgent need to address climate change, the Bank will nearly triple its annual climate financing to reach US $5 billion a year by 2020,” it said.
The other High 5 Priorities are Light up and power Africa, Feed Africa, Industrialise Africa and Integrate Africa.