Shelter Afrique Development Bank (ShafDB) is seeking a loan from The Arab Bank for Economic Development in Africa of Sh15.48 billion. The money will help some of its member countries who have fallen behind on their payments, as the bank works on restructuring its capital. The Nairobi-based Pan-African financier of housing projects is owned by 44 African countries such as Kenya, African Development Bank and African Reinsurance Corporation.
Some of the member countries have not been paying for their shareholding, which has forced the development bank to loose 133,224 unpaid shares worth Sh30.4 billion. In order to boost its capital base as it undergoes a turnaround period, ShafDB has brought on board the Arab Bank to help shareholders meet their obligation to it even as it expects the owners to raise Ksh 25.8 billion.
Shelter Afrique says that with support from Badea, it has created a new financing plan in which eligible member countries borrow money on good terms. The $120 million from Badea will help them pay and increase their capital contributions to the bank. The forfeited shares will be redistributed to interested member states on a first-come first-served basis. Redistribution of the shares will result in the government ownership in the Development bank to reduce. The ShafDB saw this as an insight as members could only exercise their right in its cash call if they had no debt. The unpaid capital was one reason the South African rating agency, GCR Ratings, did not give the bank a higher rating.
According to GCR Ratings, Shelter Afrique has been working to improve its finances, but delays in shareholder payments and unpaid capital have held back its credit rating. To raise more funds, the bank has asked member countries to contribute over $200 million over the next three years. The payment plan starts with equal amounts from all members, then moves to a system where those who pay earlier or more get a bigger share.
The bank reported a profit of Sh69.9 million in 2024, making a loss of 44% as compared to 2023. It’s the first time in a decade it has made profits two years in a row. This follows a loss of Sh1.5 billion in 2022 and years of financial struggles. Shelter Afrique is now undergoing a major turnaround, focusing on recovering bad loans and clearing debts.
Also Read: Shelter Afrique to Fund Housing Units in Zimbabwe.
