Trouble is brewing at the Pan African body for habitat and urban development Shelter Afrique ahead of its annual general meeting slated for next month in Kigali, Rwanda.
Formed in 1982 together with the Afrexim Bank and Africa Re, the organization compares badly to the latter two.
Since its formation 40 years ago, Shelter Afrique has faced persistent financial difficulties, recording significant cumulative losses in recent years.
Its total assets stood at a mere USD 270 million in 2022, a trivial amount for a pan-African institution whose mandate requires enormous amounts of resources estimated in the tens or even billions of dollar.
This financial profile makes it difficult for Shelter Afrique to mobilize substantial financial resources due to a combination of institutional, financial and operational weaknesses.
By the end of 2022, Afreximbank’s total assets were USD28 billion, whilst Africa-Re’s were USD2 billion, respectively.
This is between 10 times and 100 times larger than that of Shelter Afrique’.
This stark divergence is assets, highlights Shelter Afrique’s snail paced growth and raises questions about congenital flaws at inception that continue to stagnate its growth.
Shareholders reluctance to support capital increase in 2013 and 2017 and the lack of interest from the other 10 countries that have yet to join the institution reflect underlying mistrust and indicate a lack of confidence in the institution\s future and capacity to deliver on its mandate that is addressing critical issue of housing and urban development in Africa.
The upcoming AGM to be held in Kigali on June 11-13 provides a crucial opportunity to address these issues.
On the Agenda are modification of statutes and formally transforming the institution into the Shelter Afrique Development Bank.
According to pundits, this meeting could be pivotal in resetting and course-correcting the trajectory of the institution and catching up on lost time amidst an environment of institutional fragility and uncertainty.
And with tightening fiscal space and numerous internal and external obligations, including debt servicing, member states with accumulated arrears face tough decisions regarding the optimal use of taxpayer funds.
Before clearing these arrears, they must obtain satisfactory answers to a fundamental question on what is the return to investment for their taxpayers, both as shareholders and beneficiaries of the investments made on their behalf?
Given the current situation, it is essential for stakeholder representatives to enforce a profound restructuring of Shelter Afrique to provide it with solid institutional foundations.
This expected restructuring should involve all stakeholders and adhere to best practices in institutional governance and operational excellence.
Alternatively, shareholders may consider setting up a new entity with the required corporate governance structure, financial resources and operational capacity to address Africa\s enormous deficit in housing and urban development.
It is incumbent upon them to take a hard look at the state of affairs and make the tough decisions required to meet the needs of Africans.
Africa’s population is projected to reach 2.5 billion by 2050 with around 60 percent living in urban and peri-urban areas.
This represents an increase of approximately 1.2 billion new urban dwellers.
To meet these needs Africa requires a robust Shelter Afrique.
AfDB President Akinwunmi Adesina estimated at a high-level forum for mayors during the 2023 Africa Investment forum in Marrakech, Morocco, that investments in Africa’s housing sector reach USD 140 Billion annually, roughly 5.5 per cent of the continent’s GDP.
But with the current state of affairs Shelter Afrique which was created to be the lead actor in the housing space is not able to play that role and have the expected impact.
The 44 member states, along with 10 other countries not yet part of the institution including Egypt, Ethiopia, Sudan, and South Africa seek concrete answers from reformed Shelter Afrique.
To overcome its institutional and financial challenges, a deep restructuring cannot be ignored, officials said.
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