KENYA – Shelter Afrique, Pan-African housing development lender, has announced a return to profitability with a net profit of US$75,000 (KSh7.8m) for the first half of 2019.
Shelter Afrique recently released its second-quarter financial results as it announced its turn around plan. The profit is a 102% increase from the previous period which reported a loss of US$5,000 (Ksh500m). This was attributed to the growth in fees and commissions from new projects, performing loan books and loan recoveries.
During the period, fee and other income grew by 11% to US$0.7 (KSh80m). The liquid ratio position was stable and maintained the 15% minimum threshold. Interest income decreased by 19% to US$7.5m (Ksh779m).
This was attributed to reduced loan portfolio since there was no new lending for the past two and a half years. Interest expense also decreased by 35% due to reduced debt load. The operating expenses also decreased by 9% due to stringent cost-containment measures.
According to Daniel Nghidinua the Shelter Afrique chairman, that turn around the process was fast-tracked by enhanced corporate governance, robust enterprise, risk management, new management team, a new strategic plan, new business model and debt restructuring plans
Shelter Afrique had recently temporarily stopped taking new projects in 2016 in order to restructure operations and development of new strategies but resumed full operations at the start of 2019.
Thus has launched new projects such as Richland points, Everest apartments and Karibu Homes in Kenya and Ragarama Housing Project in Rwanda.
“It is a modest profit, but to us it is a big milestone,” said Shelter Afrique Managing Director Andrew Chimphondah. The profit came against a budgeted loss of US$0.69 (KSh72m).
“Because we’ve been closed for new business for the past three years, I’m happy to announce that effective 2019, we’ve now started to lend, we started to open to new business,” said Chimphondah. With this resumption, the MD said their target for 2019 is to payout at least US$20 million (KSh2 billion).
In 2016, the lender halted undertaking of new projects to pave way for restructuring of its operations and for the development of a new strategic direction.