Shelter Afrique, the Pan African Finance Institution Signs Sh4.5 Billion Deal
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Africa, January, 08 2015 - Shelter Afrique, the Pan African finance institution exclusively supporting the development of affordable housing and real estate in Africa has penned a $50 million (Sh4.5b) finance deal with KfW, the German Development Bank.
The deal will see Shelter Afrique receive $50m from the German bank; the loan which is repayable over ten years will be used for construction finance for private and state-owned companies and for on-lending to commercial banks and micro-finance institutions.
The loan signing comes at a time of a resurgent dollar and will go a long way to compliment Shelter Afrique’s dollar liquidity ratio as well as providing competitively priced project finance products and lines of credit.
This loan agreement represents the first of such agreements between the institutions and sees Shelter Afrique committing to find lasting and credible partnerships for the delivery of affordable housing.
It also represents an era when the Pan-African institution will venture into Europe for finance partnerships, having already signed similar deals with the European Investment Bank and the FMO.
The agreement also see the German Development Bank increase its developmental footprint on the continent, having established a strong presence in several countries in sub-Saharan and North Africa.
Last week, Home & Away reported Shelter Afrique would reinvent its business model following the transformation of the sector on many parts of the continent.
According to James Mugerwa, the managing director, the housing industry has changed rapidly within the last three decades as national governments begin to see housing as a basic human right, thus drafting policies to address the shortage of housing on the continent.
He said that African populations are continuing to grow with a strikingly young demographic, with many countries on the continent expected to double their populations in the next 30 years.
Rapid urbanisation is also expected with 70 per cent of Africa projected to live in urban centres pushing the housing crisis further. In addition, Mugerwa said banks and financial institutions have begun to develop housing, mortgage and construction financing products.
“This wasn’t the case when we came into existence and we are beginning to find our model challenged and competition in the industry increasing. However, we see the competition as welcome and timely with the entry of more players into the industry leading to many more housing and mortgage products. These should ultimately lead to a reduction in price and widespread home accessibility,” says Mugerwa.
It is against this background that Shelter Afrique has strategically moved its business model towards affordable housing and access to construction finance for homes in the middle income and low-income brackets.
The company says this is where demand is most apparent. Through public private partnerships, Shelter Afrique hopes to leverage on its long standing relationship with close to 44 African governments that can invest in projects by providing resources.