Real Estate Support of $200m in Nigeria by Shelter Afrique

Interview of Oumar Diop, Shelter Afrique’s resident regional representative by Odinaka Mbonu

Shelter Afrique

OUMAR DIOP is Shelter Afrique’s resident regional representative. Shelter Afrique is a pan-African institution that supports development of the housing and real estate sector in Africa.  In this interview with ODINAKA MBONU, Diop highlights the institution’s activities, achievements and challenges that tend to limit the optimization of its functions, especially in Nigeria. Excerpt:

What does Shelter Afrique really do?

Shelter Afrique basically finances real estate developments in her member countries. Currently we are doing business in 44 countries in West Africa and our mandate is to support both the private and public sectors to supply more houses in Africa. Our shareholders comprise of African Development Bank (AfDB) which is the major shareholder. We also have the African Reinsurance company as a shareholder and the other shareholders are the African governments.

Could you tell us some of your achievements in Nigeria’s real estate market since inception?

We have provided funding for quite a number of private developers on the supply side; we have also expanded the number of credit to primary mortgage banks like Aso Savings and Loans, Abbey Building Society to cite a few. A company like NMRC is also a partner of Shelter Afrique. Currently, our board has approved a facility of $3 million for NMRC and that was approved during our board in Abijan this year and that’s really what we are out to do by impacting and leveraging on what the NMRC wants to do for Nigeria.

 What is the volume of your investment in Nigeria so far?

I might not be able to give you an exact figure but what I know is that right now, we have the equivalent of $200 million put aside just to support the real estate market in Nigeria. Right now, we are mostly funding the real estate market in US dollars but we have planned to float a bond in the market sometimes in the second quarter of 2015 and we believe that with the local currency in hand we are really going to impact on Nigeria’s real estate market as we have always wanted to do.

What kind of checks and structures do you institute to ensure that the funds you disburse are used?

We have instituted a very strong mechanism to ensure that the money we are approving will be going directly to affordable housing projects, and this is not specific to Nigeria but in all the countries we are covering. We have independent project managers and those managers are officials of Shelter Afrique  following on the project implementation and before we disburse any fund for a specific project we need to be sure that when disbursed, the money will be channeled on that specific project.

This year, we have opened a regional office in Abuja with a team of engineers, accountants, etc and that team’s objective is just to follow up on the project we are financing. Very close monitoring is also done on all the projects Shelter Afrique is funding to ensure we are funding the right project which is affordable housing schemes.

What is your assessment of Nigeria’s effort at housing development?

We believe that Federal Government is committed to supporting the real state sector, but we believe also that there is more to do in terms of having a more conducive environment specifically for bonafide institutions like Shelter Afrique who would like to be in an environment where mortgage can be easily accessed, for instance, within three weeks, four weeks or 45 days. That will be a great achievement for the government. I believe that if the environment is very conducive, Shelter Afrique can attract other Direct Foreign Investors into the real estate market.

Specifically, what areas are you expecting changes from the government?

Mostly on land titling and mortgage perfection; being able to process and perfect mortgages between one month, two months or three months will go a long way to help Shelter Afrique contribute more in the real estate market. For the time being, our major challenge in Nigeria is that of mortgage perfection, because for us we consider legal mortgages as primary security of the funding we are providing in Nigeria. So, we no longer request bank guaranty or any other collateral.

Recently, you launched $200 million for the Nigerian market. How do you intend to disburse this fund through the right channel?

We have $200 million for the Nigeria market and we are looking to disburse the fund through three possible ways.  First, we will finance construction activities. We are also identifying credible developers with strong track records and part of the funds will be disbursed to them to construct affordable housing units on the supply side. On the demand side, we have also identified a pipeline of primary mortgage banks and we are going to extend facilities to those banks for on-lending to potential off-takers.

The third channel is a private public partnership with the state governments and credible developers and on that platform we will ultimately help Shelter Afrique contribute to mass housing development because we believe that the government needs to be involved to be sure that at the end of the day the housing units churned out will meet our requirement.

Source: BusinessDay

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