Shelter Afrique Greenlights KSh 64.6 Billion Bond Program to Boost Affordable Housing Across East Africa

The board of directors for Shelter Afrique Development Bank (ShafDB), a leading Pan-African housing financier, has given its approval for the launch of a KSh 64.61 billion (equivalent to $500 million) bond program targeting capital markets across East Africa. This decision marks a pivotal moment for the regional debt instrument, which had previously faced delays due to prevailing unfavorable market conditions.

Headquartered in Nairobi, Shelter Afrique's initiative is designed to bolster its financial resilience and broaden its operational reach. The establishment of this East African Bond Issuance Programme is a strategic shift towards leveraging local currency markets. By engaging domestic institutional investors, such as pension and insurance funds, the bank aims to significantly reduce its exposure to foreign exchange fluctuations, a strategy endorsed by World Bank housing finance frameworks, while simultaneously deepening regional capital markets.

This program follows earlier intentions in 2024 to issue medium-term notes in Kenya, Uganda, Tanzania, and Rwanda, with a planned listing on the Nairobi Securities Exchange. However, these plans were subsequently deferred in 2025. Management cited high interest rates in the target markets, which were deemed unsuitable for achieving optimal pricing. As the lender noted last year, "In line with our prudent financial strategy, we opted to wait for a more favourable environment and to strengthen our market position.”

The bond issuance is slated to commence in 2026, with the total amount to be raised in multiple tranches, each with a maturity period of five to seven years. Prior to the actual issuance, Shelter Afrique will engage in a 'book-building' process to gauge investor appetite and determine market-driven pricing. The development bank also plans to issue the bond across various East African markets to further shield itself from currency risks, with proceeds earmarked for investment in Kenya, Rwanda, Uganda, and Tanzania, where it has existing housing projects and mortgage refinance company stakes.

This financial undertaking is critical for Africa, which grapples with a housing deficit estimated at approximately 52 million units. The continent's rapid urbanization, population growth, and infrastructure gaps place immense pressure on governments and financial systems. Shelter Afrique, through such initiatives, plays a crucial role in mobilizing resources to address these pressing development challenges and foster sustainable urban growth across its member states.

Shelter Afrique last issued a bond in Kenya in 2013, a KSh 5 billion, five-year note that carried an interest rate of 12.75 percent. The institution, which continues to restructure its balance sheet and operations to enhance investor appeal, is owned by 44 African nations, including Kenya, alongside the African Development Bank and the African Reinsurance Corporation.

This report draws insights from an earlier publication by Business Daily.