Shelter Afrique gets Sh436m loan for mortgage lending

Pan African mortgage lender Shelter Afrique has received a Sh436 million loan for onward lending to 4,000 borrowers.

The French Development Agency (FDA) signed a $5 million loan with Shelter Afrique, which will create a credit line for banks to borrow from and lend to their customers.

The deal targets micro-lenders who will lend long-term loans to their clients to buy houses.

“The loan will provide much needed long term financing to local microfinance banks for on-lending to people of low income. The facility will help about 4,000 families in Kenya own homes,” said Shelter Afrique in a statement.

The firm did not give a value on the type of house that it ranks as low-income but in the past the lender has classified a low-income house as one that costs Sh1 million and below.

Despite the huge potential, the low-income market has been neglected by developers and lenders who favour the high-end market.

“We are pleased that low-income housing is receiving the attention it rightly deserved and we commend FDA for their commitment in supporting housing project for the low-income group,” said Shelter Afrique managing director Alassane Ba.

A coverage report on Housing Finance by Sterling Capital said that the mainstream banks, which mostly lend to the high-end market, account for 90 per cent of Kenya’s mortgages.

“The Kenyan mortgage loan size has recorded a steady growth rate but is still focused around higher-end clientele mainly located in Nairobi. The mortgage market is slow to shift downstream to the medium and low-income earners,” said a coverage note on HF by Sterling Capital.
Shelter Afrique could not give the rate on the loan or the exact tenure citing legal restrictions.

Previously it has managed to borrow at between 12.5 per cent and 1.5 per cent above the 180-Day Treasury Bill through a five-year bond that issued in October.

The bond had both a fixed and variable option.

The lender recently raised Sh3.5 billion through the bond that was oversubscribed by 43 per cent.

Shelter Afrique attracted Sh5 billion against Sh3.5 billion it had initially sought.

The company also signed a $10 million deal with Banque Rwandaise de Development that will lend to Rwanda’s low-income market which will benefit an estimated 1,000 borrowers.

“With this new credit line, we expect 1,000 households at least will acquire their first home and pave the way to mobilise more financial resources to support the development of affordable housing and entice the positive impacts on the whole economy mainly for the job creation in the construction sector,” said Mr Ba.