The African Development Bank has disbursed an equity investment of US $8.2 million in Shelter Afrique, a Development Finance Institution investing in affordable housing for Africa.
On February 14, 2017, Shelter Afrique announced that it was also arranging for an immediate loan of US $20 million to the company to consolidate the position of the housing specialist for 2017 and beyond.
“These new resources show that the African Development Bank is fully committed to the growth and development of Shelter Afrique, which plays a vital and unique role in the development of affordable housing across Africa.
The injection comes after the Bank’s Managing Director Mr. James Mugerwa was fired at the beginning of the month on allegations of mismanagement.
“At the same time, the African Development Bank takes issues of governance seriously. With the strong measures taken by Shelter Afrique to improve its governance and the support of its shareholders, the company can move to the next stage of its development,” said Gabriel Negatu, Director General at AfDB’s East Africa Regional Development and Business Delivery Office.
Shelter Afrique held an Extraordinary General Meeting on January 31, 2017 in Nairobi whereby the shareholders unanimously resolved to pay up their share capital commitments of approximately US $116 million as soon as possible or to face temporary suspension from membership if not done by the end of 2017.
Shelter Afrique has recently been the subject of press speculation of overstated asset quality and substandard management operations. Following those allegations, the Board of Directors of Shelter Afrique took immediate steps and appointed a reputable firm to conduct an independent forensic audit. That investigation concluded on January 2, 2017 and recommended improvements in policy and processes which will be implemented by Shelter Afrique.
Shelter Afrique has announced that it will fundamentally improve its governance structure. Several interim executive managers are being contracted by Shelter Afrique’s Board to improve financial management and governance. The Board of Shelter Afrique will also take appropriate disciplinary actions to address the irregularities and shortcomings identified in the forensic audit report.
The shareholders also agreed to expand the shareholder base to include African and non-African impact investors this year and take Shelter Afrique to the next stage of its development. The African Development Bank intends to work with Shelter Afrique’s management and Board to support the company with technical and business development assistance throughout 2017.