It is not every day that the continent looks to Paul Kagame, Rwanda’s strongman, for help. After all, he is never far from controversy.
But his no-nonsense, pragmatic and results-driven leadership philosophy could be the jolt this continent needs to realise the full potential of its only pan-African development finance institution for affordable housing.
This June Rwanda will take over the role of chairing the little known and scandal-ridden, but critical, Shelter Afrique, which is based in Nairobi, Kenya.
Formed in the early 1980s alongside peers like the African Export-Import Bank and Africa Reinsurance, the bank describes itself as the only pan African institution that exclusively supports the development of housing and urban development in Africa. This places it at the centre of meeting the developmental needs of Africa’s rapidly growing and urbanising youthful population.
But rather than focusing on this core task Shelter has been mired in boardroom shenanigans including allegations of impropriety. Last year the company announced that it had parted ways with its Zimbabwe-born MD, Andrew Chimphonda, the third such departure in seven years. It's a dismal performance compared to the standard five-year contracts.
This was followed by the departure of Alfred Nicayenzi, a well-regarded technocrat and outsider to the inner circle, who had been brought in to stabilise the bank’s operations. His departure circumstances are yet to be fully probed.
With that level of instability at the top it’s no wonder the organisation's performance has been woefully disappointing. For example, disbursements recorded a disappointing 62% achievement of $80m during the 2022 year, compared to an ambitious target of $130m. This was significantly higher than the $26m achieved in the previous year, but still far lower than the $104m achieved in 2014.
Further perusal of the financials paints an even bleaker picture. The company reported a net loss of $11.6m, while expenses rose by a mind-blowing 18%. The last time it recorded a profit was in 2015, while total assets — which peaked at $336m in 2016 — are back at the 2013 level of just over $270m.
This is unsustainable. The entity is growing backwards. Surely Kagame, who is famous for his obsession with imposing impossible targets for his own officials to aim for, is not likely to tolerate this level of inefficiency on his watch.
The inefficiencies cannot be blamed on management alone. The governance structure of the bank is archaic, complex and cumbersome. It is a partnership between 44 of Africa’s 56 states, plus developmental institutions the African Development Bank and Africa Reinsurance.
In addition to appointing members of the board, the shareholders form an extra layer of governance, which comprises ministers of housing (not finance) from member countries. This inevitably makes for long lead times in decision-making and implementation.
Curiously, and even more disturbingly, the membership excludes some of Africa’s really big hitters, such as SA, Egypt, Ethiopia and Angola. In the case of SA this denies the institution access to much-needed expertise and capacity for driving an urbanisation drive, such as like finance, project management and construction.
For South Africans, if one needed evidence of how SA’s elite has selfishly abandoned its lofty goals of being the continent’s bellwether in economic development and industrialisation on the continent, one needs not look any further. Such neglect of the country’s role could be one of the reasons the once thriving construction sector has either died or skills developed over decades have relocated to development-focused destinations such as Dubai and surrounding areas.
Shelter prides itself for having adopted SA’s King IV code of corporate governance as its benchmark. However, it falls embarrassingly short on implementation, with devastating effects on operations. Among others, King recommends that at least two directors be executive. Ordinarily these are the CEO and CFO, but in the case of Shelter neither of the two is on the board. This means the vital link between the exclusively non-executive board and management is missing.
In a rare move in the right direction the board and management have acted to stabilise the bank with the appointment of MD Thierno-Habib Hann from Guinea (Conakry), and proceeded to revamp its corporate strategy and focus areas for the five years to 2027.
A study by the AfDB suggests that Africa boats the fastest urban growth rate in the world. It estimates that by 2050 Africa’s cities will be home to an additional 950-million people. This offers both challenges and opportunities, and an institution such as Shelter needs an overhaul to be ready to be at the centre of providing solutions for affordable social housing and related infrastructure.
If these figures are to be believed there is no doubt that Shelter Afrique is both underfunded and woefully unprepared for this task. Its balance sheet needs to be closer to $1bn and its target should be to deliver 10,000 units per member country.
After all, according to the bank itself in 2022 the housing demand in Rwanda stood at a staggering 340,000 units, while Kenya, Tanzania and Uganda faced deficits of 2-million, 3-million and 1,6-million units respectively.
Rwanda’s assumption of the leadership role could not have come at more opportune time, since the indications are that Kagame and his government take the bank seriously. Recently Shelter and the Development Bank of Rwanda concluded a deal for the development of 2,000 units in one district at an estimated $131m.
It will be in his and Africa’s wider interest for Kagame, who yearns for global recognition, to use his chairmanship to rekindle hope for the institution’s unrealised potential. Perhaps, SA and Egypt will join and inject the necessary impetus.
• Dludlu, a former editor of The Sowetan, is CEO of the Small Business Institute.
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