Homes for 300 Million Africans Boost Shelter Afrique Debt

Shelter Afrique, which finances homes in the region with the world’s second-fastest growing economy, plans to sell debt in Kenya and Ivory Coast to fund more projects and meet rising demand for housing.

The Nairobi-based organization plans to sell more than 3 billion Kenyan shillings ($34 million) of bonds by early next year, Managing Director James Mugerwa said. Notes in CFA francs, the currency used by eight West African nations, will be sold on the region’s Abidjan, Ivory Coast-based bourse by June, he said, without giving details.

African cities will have to accommodate more than 300 million new residents over the next 25 years, according to the African Development Bank, opening a market for companies such as Shelter Afrique, which funds groups from national housing authorities to private lenders. More rural people are moving to cities with growth in sub-Saharan Africa projected to reach 5.4 percent in 2014, the fastest in the world after emerging Asia, according to the International Monetary Fund.

The money will be used for “affordable housing projects” in Kenya, East Africa’s biggest economy, and Ivory Coast, the world’s largest cocoa producer, Mugerwa said in an interview in Nairobi on Sept. 3.

Kenyan government shilling debt returned 7.8 percent this year, beating the 6.1 percent average return among 31 emerging markets, according to Bloomberg indexes. Ivory Coast plans to sell 810 billion francs ($1.6 billion) of notes this year for infrastructure projects including highways, railroads and bridges.

Angola Considering

About two-thirds of the continent’s population living in cities are accommodated in informal housing, where basic services are “poor or non-existent,” according to a report published on Tunis-based ADB’s website.

Shelter Afrique, which has funders including some of the continent’s governments and the ADB, is working with Kenyan cooperative Stima Sacco to build 156 houses on the outskirts of Nairobi, and the National Housing Corp. of Ivory Coast for 1,022 units in Abidjan, the commercial capital, Mugerwa said.

In September last year, Shelter Afrique sold 5 billion shillings of floating bonds and fixed-rate debt at 12.75 percent. Next year’s offer will be the second portion of the 2018 notes. Yields on 10-year government shilling bonds dropped 30 basis points, or 0.3 percentage point, since they were issued in January to 11.9 percent by 11:42 a.m. in Nairobi, according to data compiled by Bloomberg.

Established in 1982, Shelter Afrique has 44 African nations as members. Angola, Africa’s second-biggest oil producer and whose capital Luanda is the world’s most expensive city for expatriates, is considering membership, Mugerwa said.

“Angola has shown interest in joining the organization and discussions are ongoing,” Mugerwa said. “At the same time, we are considering opening up membership to countries based outside Africa who share the same vision as ourselves and who will help the organization to boost its equity.”

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