Shelter Afrique Development Bank (ShafDB) has approached The Arab Bank for Economic Development in Africa to lend Sh15.48 billion ($120 million) to its shareholders with subscription arrears as it undergoes a capital restructuring.
The Nairobi based Pan-African financier of housing projects is owned by 44 African countries including Kenya and two financial institutions –African Development Bank and African Reinsurance Corporation.
Some of the member countries have been lagging behind paying for their shareholding, which has forced the development bank to forfeit 133,224 unpaid shares worth Sh30.4 billion ($236.2 million).
To boost its capital base as it undergoes a turnaround period, ShafDB) has brought on board the Arab Bank for Economic Development in Africa (Badea) to help shareholders meet their obligation to it even as it expects the owners to participate in a separate Sh25.8 billion cash call.
“With Badea as a strong strategic partner, the programme deploys an innovative financing solution through which eligible member states can access on-lending at competitive terms. The Badea-supported facility, totaling $120 million, will be used to settle and boost member states’ capital subscriptions to ShafDB,” said Shelter Afrique in its latest annual report.
The forfeited shares will be reallocated to interested member states on first-come first-served basis. Reallocation of the shares will result in the states shareholding in the development bank being diluted.
The forfeiture was deemed necessary by ShafDB as members could only exercise their right in its cash call if they had no outstanding obligation. The capital arrears had been cited as a factor hindering the bank from being accorded a higher rating by South African rating agency, GCR Ratings.
“The historical delays in shareholder support and the existing capital arrears remains a ratings constraint until the position has materially improved,” said GCR Ratings in its latest rating report for Shelter Afrique.
ShafDB, which is banking on its recent turnaround to appeal shareholders to inject more funds in the bank, has given shareholders a three-year payment plan to participate in its cash call.
“You, our esteemed shareholders, additionally approved a new capital call of just over $200 million, beginning with an equal allocation to all member states, and followed by a phased reallocation, first on a pro-rata basis, then on a first-come, first-served basis,” said the banks chair Chii Akporji in a note to shareholders.
Shelter Afrique reported a profit of Sh69.9 million for the year ended December 2024, a drop from Sh126.8 million in the year ended 2023.
Though the drop, this is the first time the Pan-African bank has reported profits for two consecutive years in the last decade.
The development bank had reported a loss of Sh1.5 billion in 2022 following a profit of Sh233 million in 2021 after making losses for six consecutive years from 2015.
Shelter Afrique has been on a transformational journey which has included dealing with legacy non-performing loans and debt repayments.
