- The outlook is based on GCR’s expectations of Shelter Afrique’s stability in governance structures and operational frameworks.
- GCR said the ratings could improve with significant enhancements in Shelter Afrique’s asset quality.
- The institution underwent re-alignment and introduced a new organizational structure and operating model to support innovation.
South African rating agency GCR has assigned Shelter Afrique a positive outlook, anticipating a return to profitability within the next two years. GCR gave the pan-African housing development financier long and short-term issuer ratings of B- and B respectively.
The shift to a positive outlook reflects significant improvements in fundamentals and ongoing governance reforms within the organization. Shelter Afrique cut its non-performing loan ratio to 51 per cent by December 2022 from 67 per cent in 2021 .
GCR stated, “The outlook is positive based on our expectations of stability in governance structures and operational frameworks. We also factor in improvements in risk management processes resulting in sustained enhancements in asset quality, and anticipate strong capitalization with the company’s return to profitability within the next 18 months.”
GCR also noted that ratings could improve with defined and significant enhancements in asset quality, without a decline in leverage or reserve coverage ratios. Furthermore, a turnaround in earnings leading to sustained profitability could also contribute to improved ratings.
Shelter Afrique strategic objectives
In August 2022, Shelter Afrique appointed Thierno-Habib Hann as its new chief executive, succeeding Andrew Chimphondah. Earlier this year, Shelter Afrique unveiled a five-year strategic plan aimed at restoring performance, competitiveness, and long-term value creation.
The institution underwent re-alignment and introduced a new organizational structure and operating model to support innovation, growth, and productivity ambitions for the next five years.
“This positive rating aligns with our 2023-2027 strategic objectives, in which we aim to position the institution for growth through improved governance, operational efficiency, and financial performance,” stated the company.
Read also: Nigeria pays US$7.15 million for larger stake in Shelter Afrique
Shelter Afrique is a pan-African housing finance and development institution addressing the need for a sustainable housing delivery system and related infrastructure projects across Africa.
Supports affordable housing value chain
It offers financial solutions, advisory services, and project management, and supports the affordable housing value chain. The organization is currently owned by 44 African countries, the African Development Bank (AfDB), and the African Reinsurance Corporation (Africa-Re).
The ‘New Dawn’ is a fitting name for the years 2023–2027. The institution’s main priorities right now are better financial performance, operational effectiveness, and governance. The ‘New Dawn’ strategic plan provides the institution with renewed impetus to prioritize clients and business performance.
With a focus on mobilization and syndication, Shelter Afrique will concentrate on four key business lines. These are funded and unfunded lines of credit for financing housing through lenders. Project finance for large-scale housing initiatives, and structuring affordable housing public-private partnerships (PPPs). It will also focus on thematic housing fund management and advisory services.
Rent-to-own financing
The plan also emphasizes the establishment of innovative product structures such as Employer Staff Housing Funds, and Green/Resilient homes. Other products are rent-to-own financing that allow the institution to reach end-users effectively.
To support the implementation of the strategic plan, Shelter Afrique introduced a new organizational structure. This structure comprises dedicated units focusing on financial institutions, project finance, fund management, and public-private partnerships. Additionally, the CEO’s office will oversee strategy, policy, research, and partnership functions.
With the ‘New Dawn’ strategic plan in place, Shelter Afrique will make a lasting impact in the housing finance and development landscape, driving growth and delivering sustainable solutions across Africa.