Kenya: Shelter Afrique, a pan-African housing finance institution, plans to sell debt in Kenya and Ivory Coast to fund more projects and meet rising demand for housing.
The Nairobi-based organisation plans to sell more than Sh3 billion ($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 per cent 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 last week.
Kenyan Government shilling debt returned 7.8 per cent this year, beating the 6.1 per cent 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.
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 co-operative 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 Sh5 billion of floating bonds and fixed-rate debt at 12.75 per cent. Next year’s offer will be the second portion of the 2018 notes. Yields on 10-year government shilling bonds has dropped 30 basis points, or 0.3 percentage point, since they were issued in January to 11.9 per cent, according to current data.