Arab Bank for Economic Development in Africa (BADEA) has approved landmark $120 million to support the capitalisation programme of Shelter Afrique Development Bank (ShafDB), a Pan-African institution that focuses on affordable housing and urban development.

Effectively, the announcement of the signing of this strategic agreement through the concessional financing facility will help eligible member states settle and increase their capital subscriptions to ShafDB

Further, the initiative introduces an innovative financing mechanism through which eligible member states can access on-lending at competitive terms as the BADEA-supported facility, totalling $120 million, will be used to settle and boost member states’ capital subscriptions to ShafDB.

“This agreement with BADEA marks a critical step in strengthening our capital base and advancing our mission of financing affordable housing and sustainable urban infrastructure across Africa,” noted Thierno Habib-Hann, ShafDB managing director after the signing ceremony.

“We are grateful to BADEA for its strong partnership and unwavering support in this pivotal phase of our institutional evolution,” he added.

The new capital increase programme includes an initial equal allocation to all member states, followed by a phased reallocation, first on a pro-rata basis and then on a first-come, first-served basis. This approach aims to encourage active participation by member-states and to strengthen ShafDB’s capital adequacy in a balanced and transparent manner.

Commenting on the programme, President of BADEA Abdullah Almusaibeeh, described the capital programme as a strategic milestone in Shelter Afrique Development Bank’s evolution.

“BADEA is proud to back this initiative and we remain committed to our shared mission of enabling access to decent housing and inclusive urban development across Africa,” he reaffirmed.

Meanwhile, the need to enhance equity capital has become critical following the ShafDB’s transformation into a development bank, a milestone formally approved by Shelter Afrique’s shareholders during the extraordinary general meeting in Algiers, Algeria, in October 2023.

Building on this transformation, a significant achievement was realised during the annual general meeting in June 2024 in Kigali, Rwanda, where shareholders demonstrated strong leadership by endorsing a transformative capital increase program, which the board approved in December 2024 to the tune of over $200 million.

“Expanding capital base will enable the bank to scale up financing along the housing value chain, access more competitive funding from international and African capital markets and reinforce its role in addressing the housing deficit and driving inclusive urban development across its 44 member-states,” said Habib-Hann.

Notably, the capital increase programme has been designed to significantly strengthen ShafDB’s balance sheet over the medium-term, expand its shareholder capital base, and to significantly mobilise debts. 

The capital raised will also support the bank’s plans to attain investment-grade credit ratings, attract new institutional investors and expand its lending and technical assistance programmes in member countries.

• A Tell Media / KNA report / By Michael Omondi