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Shelter Afrique signs USD1.5bn housing deal with the Government South Sudan

Shelter Afrique signs USD1.5bn housing deal with the Government South Sudan

Nairobi: 10 May 2021 – Pan-African housing development financier Shelter Afrique has signed a Memorandum of Understanding (MOU) with Juba-based real estate firm, Triangle Real Estate to develop 26,000 housing units for South Sudan Defense Forces at an estimated cost of USD1.5bn through a public-private-partnership special purpose vehicle.

The MOU was signed in Nairobi by Shelter Afrique Chief Executive Officer Andrew Chimphondah and Triangle Real Estate Chief Executive Officer Amb. Arop Deng Kuol, on behalf of the Ministry of Finance and Planning for the Government of South Sudan.

“We have been mandated by the Ministry of Finance and Planning to source for funds for the construction and completion of a defense housing project on behalf of the Government of South Sudan under the Peace Through Development programme initiated by President Salvar Kiir in 2018,” Amb. Kuol said.

Amb. Kuol noted that the signing of the MOU was critical in addressing the housing crisis in South Sudan, which has been exacerbated by many years of conflicts.

“The housing crisis in South Sudan is dire. In fact, we are starting from the scratch – the reason this memorandum of understanding we’ve signed with Shelter Afrique is very important for us and is proof that provision of affordable housing is central to the agenda of the government of the South Sudan, not just for the Forces but for the entire population,” said Amb. Kuol.

Mr. Chimphondah said the signing of the MOU with Triangle Real Estate highlights Shelter Afrique’s catalytic role in the provision of affordable housing finance across Africa.

“Our vision is to provide affordable housing for all Africans – including South Sudan. We are proud to be part of this partnership and we look forward to being the pre-eminent provider of financial, advisory and research solutions geared towards solving the housing crisis in South Sudan which has a shortage of 4 million units,” Mr. Chimphondah said.

The Project scope includes development of 148 housing blocks of 160 housing units each at New Site, Qiada Junubiya, J-3 Presidential Guards Apartments, and at New Bonga.

Under the agreement Triangle Real Estate will act as the developer and contractor of the project in conjunction with various consultants. Shelter Afrique, on the other hand, will provide catalytic funding as well as act as the lead arranger to assist in raising additional financing through the syndication of other Developmental Financial Institutions as applicable.

 

Shareholding

Amb. Kuol also noted that the government of South Sudan was keen on becoming a shareholder of Shelter Afrique and was actively sourcing the budget for the capital subscription fees.

“In addition to sourcing for finance for the Defense Forces housing project, the government of South Sudan has also mandated Triangle Real Estate and a financial advisor – Benchmark Solutions to source for funds to this effect and we are currently in talks with some potential financiers. We believe that South Sudan should become a member of Shelter Afrique in 2021 when approved at the AGM that will be held on the 24th June 2021,” Amb Kuol said.

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Shelter Afrique bounces back to profitability to signify a successful turnaround

Shelter Afrique bounces back to profitability to signify a successful turnaround

Nairobi, Kenya – Friday, March 26, 2021: Pan African housing development financier Shelter Afrique has returned to profitability as reported in its 2020 earnings.  

The Company’s Total comprehensive income increased to KSh 196 million (USD 1.85M) in 2020, up from a Total Comprehensive Loss of the KSh 134 million (US$1.26M) recorded in 2019, representing a 247% per cent increase, year-on-year – the advent of the COVID-19 pandemic in the first quarter of 2020 notwithstanding.

Addressing the Press in Nairobi, Shelter Afrique Chairman Dr Steve Mainda said the turnaround strategy put in place in 2016 has finally paid off and that the Company was now financially viable.

“Between 2016-2018, the Company scaled down its operations and, in the process, underwent a restructuring programme which resulted in the crafting of the 2019-2023 Strategic Plan. The Strategic Plan focused on three Key Strategic Goals (SGs), which are supported by key strategic objectives of achieving financial sustainability, enhancing shareholders’ value & development impact, and organisational sustainability. I wish to commend the competent team for their judicious implementation of the recovery plan which has achieved the desired results ahead of time,” Dr. Mainda said.

In the 2019-2023 Strategic Plan, the Company had projected a return to financial viability by 2020 and overall financial sustainability and profitability by 2023.

“The return to financial viability ahead of schedule as signalled by the growth in operating profit and income in 2020 is an indication that the turnaround strategy has been effective. With the robust loan pipeline of KSh89 billion (US$840M) from 2021 and beyond, the Company is poised to declare dividends to the 46 shareholders sooner,” said Shelter Afrique Group Managing Director and Chief Executive Officer Andrew Chimphondah.

Strong liquidity

During the period under review, the Company maintained a strong liquidity position with a cash balance of KSh5.03 billion (US$47.4M), closing the year with a liquidity ratio of 27 per cent, 12 percentage points above the 15 per cent prudential limit. 

The strong liquidity was achieved on the back of increased capital receipts from shareholders and successful collections from the performing loan book. A total of KSh1.775 billion (US$ 16.65M) in new capital subscriptions was received from member countries during the year.

Borrowings declined by 52 per cent to KSh3.681 billion (US$ 34.71M) in 2020 from KSh 7.599 billion (US$ 71.65M) recorded in 2019.  COVID-19 impact also led to reduced net loan assets by 11% to KSh 10.78 billion (US$ 101.66M) due to low disbursements caused by the stringent underwriting controls based on an increase in reassessed credit risks.

The Chief Executive, however, noted that the significant financial milestone registered in 2020 was the successful conclusion of the Debt Restructuring Agreement (DRA) with the eight global lenders. This played a crucial role in fast-tracking the Company’s return to profitability, despite the impact of COVID-19 Pandemic, which saw the global economy fell into recession with GDP rate estimated to have declined by an average of 4.5 per cent. 

“In May 2020, we signed a Debt Restructuring Agreement (DRA) with six Development Finance Institutions (DFIs) and two Commercial Banks Lenders. With the full return to profitability, we are on track to fully repay this debt by June 2021, three years ahead of schedule,” Mr Chimphondah said.

Additional Capital

Speaking at the event, the Vice-Chairman of the Board, Mr Sekou Demba said the Company was reviewing various capital raising options, including new equity capital and debt options through the issuance of local currency bonds to develop and deepen Africa’s capital markets.

“We have intensified capital subscription receipts from current shareholders, and at the same time, we are mobilising new Class “B” & “C” members. Already, Fonds De Solidarite Africain (FSA) is expected to join under Class “B” shareholding in June 2021. We also plan to raise new debt funding with current and new DFIs lenders, including possible facilities from BOAD, ICD, Credit Suisse, and the Trade Development Bank,” Mr. Demba said.

Chimphondah expanding on this said The Company was also planning to issue Local Currency Bonds amounting to KSh 53 billion (US$ 500M) Note Program; KSh 53 billion (US$ 500M) planned for East African through the Capital Market Authority of Kenya; and a minimum of KSh 10.6 billion (US$ 100M) in CFA equivalent for the CFA Zone.

 

Positive outlook

Mr Chimphondah said despite COVID-19, the Company sees enormous opportunities to deliver large scale low-cost affordable housing units across the continent to improve sanitation standards, backed by healthy loan asset growth to deliver on the KSh 89 billion (US$ 840M) plus pipeline. 

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Statement of Commitment for EDGE Champions

Excellence In Design For Greater Efficiencies

Shelter Afrique has been recognized as an EDGE Champion by IFC, a member of the World Bank Group, for our commitment to green building construction in Africa.

We have committed to certifying 4,416 affordable housing units with EDGE, a global green building certification system, which is in line with our 2021-2025 corporate strategy. To achieve EDGE certification, the units will demonstrate resource efficiency of at least 20 percent in energy, water, and embodied energy in materials.

Furthermore, through our Centre of Excellence (CoE), we will collaborate with IFC to deliver an EDGE Discovery Workshop to developers across Africa to accelerate the development of resource-efficient affordable housing.

This commitment exemplifies our resolve to support Africa’s sustainability drive by contributing to solving the continent’s affordable housing crises through green building practices.

An innovation of IFC, EDGE is an online platform, a green building standard, and a global certification system. EDGE Champions are recognized for their adoption of EDGE certification and their work with IFC to steer the construction sector onto a more low-carbon path.