Rating firm GCR upgrades Shelter Afrique’s outlook

Shelter Afrique headquarters in Upper Hill, Nairobi. PHOTO | POOL

South African rating agency GCR has assigned a positive outlook on the pan-African housing financier Shelter Afrique on expectations of a return to profitability within the next two years and ongoing governance reforms at the organisation.

GCR on Friday gave the financier's long and short-term issuer ratings of B- and B respectively, with a positive outlook that signals a future upgrade should its books continue improving.

Shelter Afrique has recently installed a new executive team and cut its non-performing loans ratio from 67 percent in 2021 to 51 percent at the end of last year.

“The outlook is positive based on our expectations of stability in governance structures and operational frameworks. We also factor improvements in risk management processes resulting in sustained improvements in asset quality, and capitalisation to remain strong with the company returning to profitability within the next 18 months,” said GCR.

“The ratings may be improved if there is a defined and material improvement in asset quality without a deterioration in leverage or reserve coverage ratios. The ratings may also be improved if there is a turnaround in earnings with sustained profitability.”

In August 2022, Shelter Afrique picked former International Finance Corporation (IFC) Asia-Pacific Lead for housing finance Thierno-Habib Hann as its new chief executive to succeed Zimbabwean Andrew Chimphondah who left in February 2022.

Shelter Afrique, owned by 44 African countries and three development institutions — African Development Bank, African Reinsurance Corporation and the African Solidarity Fund — has had three CEOs in less than eight years.

The C-suite changes reflected the financier's struggles with losses amid high financing costs.

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