This archive report was first published on 21 September 2019.
Published on September 21, 2019, Shelter Afrique, a Pan-African based affordable housing mortgage firm, has put on hold its full financial support to projects as part of its efforts to claw back into profitability.
The company has been working to reconfigure its strategy, which includes a 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.
As part of the cautious approach, Shelter Afrique has strengthened its recovery of bad loans through the fast tracking of unfinished projects, trimming its share of non-performing loans by Ksh.1.3 billion in six months to June 2019.
The company's prudent business management strategy saw it book a narrow Ksh.7.8 million net profit for the period, breaking a four-year streak of back-to-back losses.
However, the firm's share of bad loans as a percentage of the total loan book averaged 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.
Shelter Afrique's total assets dipped by 26 percent to Ksh.21.7 billion, while shareholder funds fell to Ksh.11.5 billion.
Despite 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.
However, Shelter Afrique 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 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 constraints by their principal owners.
