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Shelter Afrique Managing Director Alassane Ba says projects to benefit from the money raised through the bond had already been identified/FILE

Kenya

Shelter Afrique bond trades on Nairobi bourse

Shelter Afrique Managing Director Alassane Ba says projects to benefit from the money raised through the bond had already been identified/FILE

Shelter Afrique Managing Director Alassane Ba says projects to benefit from the money raised through the bond had already been identified/FILE

NAIROBI, Kenya, Oct 24 – Nairobi-based Pan African housing and urban development financier, Shelter Afrique, has listed a Sh3.5 billion bond on the Nairobi Securities Exchange (NSE), the first portion of a Sh8 billion medium term note.

The listing follows a successful bond issue that that concluded on September 20, and received Sh5 billion representing a 43 percent over subscription.

The funds are to be used to fund low cost urban housing projects across the country.

Shelter Afrique Managing Director Alassane Ba says projects to benefit from the money raised through the bond had already been identified; adding that the company was keen on working closely with the government in meeting the country’s housing needs.

‘We shall be supporting low cost housing projects to cater for the rising demand for housing, especially at the lower end of the pyramid. Already, we are working with about 2,000 families through the Makau Mashinani project to help them improve their homes. With the Government of Kenya and UN Habitat, we are about to launch a new scheme for 2,500 slum dwellers in Mavoko,” he added.

Fixed rate investors took 85 percent of the issue, while floating rate subscribers snapped the 15 percent balance of the note.

The fixed rate notes were issued at an interest rate of 12.75 percent, while the floating rate notes were priced at 150 basis points above the 182-day Treasury Bills.

While launching the bond trading, the Principal Secretary for Lands, Housing and Urban Development Mariamu el Maawy challenged developers to use cheaper house construction materials to make houses affordable to majority of Kenyans, noting that the improvement of housing provision was a major concern to the government.

“For a long time, the housing sector has not attracted adequate investment to meet the ever increasing demand. This has been due to various constraints in the housing development and delivery process, particularly for the lower middle and low-income groups,” Maawy said.

The constraints include high cost of finance; lack of adequate serviced land; high cost of building and construction materials; inappropriate building and construction technologies; limited research on low cost building materials and construction technologies; and high cost of infrastructure.

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She says Kenya has a low-level urban home ownership estimated at only 16 percent, with expansive slums and informal settlements.

“It is estimated that out of a total 150,000 housing units required annually in urban areas, only 35,000 units are produced,” she said.

The Principal Secretary said the government has prepared a long term strategic plan to help address the bottlenecks hindering development, access to affordable and adequate housing through enhancement of access to affordable finance for developers and buyers; and through pursuit of targeted reforms to unlock the potential of the housing sector.

“It’s the government’s intention to facilitate the production of 250,000 housing units annually through a mixture of initiatives in order to fill the huge housing gap in the country,” the Principal Secretary said.

She added that provision of adequate housing is an important social and economic investment.

She also noted that her ministry was helping counties in physical planning, cleaning up land registries through digitisation, enhancing county governments’ capacity to provide serviced land and development of low-cost housing, and cleaning up the building and construction industry in Kenya.

Shelter-Afrique is owned by 44 African governments, the African Development Bank and the African Reinsurance Corporation.

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