Shelter Afrique new boss to focus on Sh10bn bad loans book

Cleaning up the non-performing loans book is the top priority for Shelter Afrique’s new director-general Andrew Chimphondah.

Mr Chimphondah, who took the helm at the troubled Pan-African mortgage firm seven months ago, says lending will focus on large-scale property developers, those constructing at least one thousand units, and projects available through public-private partnerships.

The strategy shift signals a more cautious tolerance for risk than Shelter Afrique has had in the past.

“We had a challenge with non-performing loans where they just skyrocketed. We currently have a book of about $100 million (about Sh10 billion) which makes up 46 per cent of our loan book currently. It is my clear focus to bring this to less than 10 per cent within five years”, Mr Chimphondah said yesterday. The new boss says the lender has established a special operations unit aimed at driving loan recovery.

He says $13.5 million has been recovered this year.

With the company’s portfolio presently dominated by developers dealing with less than one thousand units, Shelter Afrique is banking on partnerships with the government to generate a steady pipeline of projects that meet the envisioned scale.

“Late in 2016 President Kenyatta announced his Big 4 Agenda part of which is the delivery of affordable housing. We as Shelter Afrique are working very closely with the government in terms of wanting to assist in providing support towards realisation of this agenda”, he said.

Among Mr Chimphondah’s priority turnaround strategies will be actualisation of the onboarding of new shareholders to the company’s Class C shareholder segment, which was adopted in early 2017. This is aimed at addressing share capital remittance delays suffered by the company as well as adding to the pool of skill available on the financing of affordable housing. “We’ve already received interest from the likes of KfW and CDC and we will be approaching others including the International Finance Corporation,” he said.

In January 2017 the Shelter Afrique board created a Class C stratum of shareholders that sought to diversify its pool of capital.

The mortgage lender has in the past decried shareholders’ failure to meet their capital contribution requirements, a trend which has derailed its capacity to extend mortgage credit. Arrears in shareholders’ capital contribution stood at $211 million as of Monday, representing an 84.6 per cent increase from the end of 2017.