Shelter Afrique freezes full project financing

Pan-African based affordable housing mortgage firm Shelter Afrique has put on hold its full financial support to projects under its continued attempts to claw back into profitability.

The reconfiguration of strategy sits along the firm’s return to active lending following a three-year lending hiatus.

According to Shelter Afrique Managing Director Andrew Chimphondah, the shift is an informed strategy to crackdown on the company’s bloated non-performing loans which majority sit within co-shared projects with unproven developers.

“We have improved our underwriting controls and won’t be providing 100 percent of funds to projects. We would only come in for catalytic purposes to crowd in greater funding from partners,”said Chimphondah.

Further, the company has strengthened its recovery of bad loans through the fast tracking of unfinished projects to trim its share of non-performing loans by Ksh.1.3 billion in six months to June 2019.

From the cautious approach, Shelter Afrique squeezed through the eye of a needle to book a narrow a Ksh.7.8 million net profit for the period, breaking duck on over four years of back to back loss making.

Even so, the prudent business management strategy saw the firm’s share of bad loans as a percentage of the total loan book average out at 50 percent or an equivalent Ksh.10.4 billion as the company’s loan book shrunk by a further 33 percent to Ksh.15 billion.

Similarly, Shelter Afrique total assets dipped by 26 percent to Ksh.21.7 billion as shareholder funds followed a similar slide trajectory having fallen to Ksh.11.5 billion.

In spite of the mixed outcome on the balance sheet, Shelter Afrique Chairman Nghidinua Daniel has backed the austere strategy to recapture value to shareholders.

“We needed to stop the bleeding as we have had some turbulent years that nearly crippled our operations. We can now re-assure our shareholders that we have again positioned ourselves to deliver on our mandate,” he said.

Shelter Afrique however faces a mounting challenge in shoving up its capital base to deliver on its ambitious support for affordable housing across the continent.

Out of its Ksh.104 billion shillings authorized share capital, Shelter Afrique’s issued capital still sits at a lower Ksh.34.6 billion with only Ksh.10.6 billion representing the share of paid up capital.

The company which is majority owned by 44 African governments has the daunting task of raising an additional Ksh.2.1 billion in capital by the end of the year against fiscal constrains by their principal owners.