On 21st October 2016, African Governments signed up for the New Urban Agenda in Quito, Ecuador, a non-binding agenda for making cities safe, sustainable and resilient. The New Urban Agenda sets global standards for sustainable urban development during a period in which the world is experiencing the most rapid urbanization in history.
More than any other continent, Africa is facing extreme rapid urbanization. This is a challenge that Shelter Afrique and other Regional Institutions will tackle with African Governments and their agencies in delivering the New Urban Agenda. It is for this reason that the 2017 Symposium aimed at achieving the following objectives :
a) Shareholders to discuss in a plenary session how Shelter Afrique can be repositioned to act as the key inter-regional vehicle in the New Urban Agenda;
b) For Shelter Afrique to explore in a workshop session the required capital to effectively play the role in (a) above and how this capital can be mobilized for delivery of affordable housing projects;
c) For Shareholders to explore appropriate governance structures required to ensure that Shelter Afrique can sustainably fulfill its mandate.
Plenary Session:
There was a key note address from Honorable Fashola, contributions from four speakers as well as submissions by participants. From all these, it emerged as follows:
1) Housing should be a priority in the debate surrounding sustainable urbanisation and implementation of the same should be a lifetime and generational approach.
2) Shelter Afrique should endeavour to work with both Public and Private sector to deliver affordable housing.
3) The governance and administrative structure of Shelter Afrique needs to be strengthened if the institution is to achieve its mandate.
4) Rental housing should be viewed as a first step towards the home provision and governments should put in place policies to support rental housing programs.
5) Shelter Afrique should expand its mandate to being a resource center for housing and providing technical advice in addition to providing housing finance
Finance Break Away Session:
The moderator of the session, Mr Gabriel Negatu presented the current financial situation of Shelter Afrique. Some of the key highlights of his presentation are as follows:
• Shelter Afrique would run out of cash in 2017 unless the shareholders contribute an additional $33 million above the amounts already paid.
• The root cause of the company’s financial difficulties was weak capitalization due to the Shareholders failure to meet their capital contribution commitments.
• Shelter Afrique required cash injections of $33 million in 2017, $80 in 2018 and 2019 to fully recover from the crisis.
A question was then posed to the participants on how Shelter Afrique can get sufficient and timely capital subscription to sustain the organization. The outcome of the deliberations is detailed below:
1) African countries should mobilize resources specifically for the housing sector and housing related infrastructure from special levies. Africans needs to find its own solutions rather than counting on the international community to address our housing needs.
2) The expectations of Africa go beyond SHAF’s capabilities. Shelter Afrique should be able to leverage its equity to attract additional funding to finance larger scale projects.
3) It is the responsibility of the Board of Directors and Management ensure all the lending that is done is aligned to available resources so that the company does not experience a liquidity crisis.
4) SHAF has been lax in the collection of the overdue subscriptions. The institution should introduce steep penalties for delayed payments before the end of July. The AGM should consider auctioning the shares of the countries in arrears.
5) Shelter Afrique should provide member countries (Ministries of Housing) with a value proposition to increase shareholding as this ultimately needs to be presented to the Ministries of Finance to justify release of funds.
6) In order to increase its impact, SHAF should hold joint planning sessions with Member Counties to understand the country priorities and, make sure that SHAF intervention are in support the countries housing policies.
7) The AGM should review the company’s statutes and allow the company to raise equity outside is membership.
8) The issue of affordability needs to be addressed. We will never be able to raise enough funding to meet the housing gap. For instance, we need to use local material to bring the cost down. We also need trade financing for imports of material from overseas.
9) Home ownership through shared equity. This allows a home owner to gain entry through owning part of a home and when income rises purchase the remainder. These need an equity partner — either a financial institution or a government-backed provider.
10) Governments could stimulate supply of rental housing through various policies which are flexible and cover a wide range of target groups and rental housing types.
11) Governments could also support the supply of rental housing by providing subsidies and tax incentives.
12) Long term capital is essential for financing rental housing. This can be accessed through bonds, pension funds and insurance companies.
13) Successful rental housing programs have been implemented across the world. A case study from India was shared with the participants where relaxation of floor space index and offering of transferable development right ( TDRs) was used to create available space in a congested area.
14) Other successful rental housing schemes that were presented included: Johannesburg Housing Company ( JHC) where more than 4,000 rental houses had been developed and OMH- Mali where PP model has been used to develop more than 6,000 rental units
Governance Break away session
The moderator of the session, Mr. Steve Mainda opened the session by highlighting the fact that Shelter Afrique had undergone 2 major crisis in the last six years which had a negative financial impact to the company. Both these crisis were caused by weak corporate governance structures. He then posed a question to the participants as to what shelter Afrique needed to do to ensure it was better governed. A summary of the deliberations is shown below:
1) Board Members need to improve frequency of communication to the General Assembly to at least once a quarter.
2) Board members representing country groupings need to communicate to other members of the group after each Board session to keep them updated on the discussion at the Board meetings.
3) The Annual General Meeting should evaluate performance of Board members on an annual basis.
4) Shareholding of the company should be open to Non regionals to generate new capital and also improve governance structures.
5) Internal Audit function needs to be strengthened to be able to detect early warning signals within the organisation before the matters reach the press/whistle blowing agent.
6) Recruitment of Key positions (Managing Director, Company Secretary and Internal Audit) should be outsourced to a reputable recruitment firm.
7) Strategy of organisation needs to be aligned to needs of member countries need. This will generate more support from shareholders financially and encourage them to be more invested in the company’s affairs.
CONCLUSION
The Symposium concluded that Shelter Afrique is instrumental in the implementation of the New Urban agenda and African governments should make housing a priority in the debate surrounding sustainable development. It was also acknowledged that, for Shelter Afrique to play this important role, member countries needed to pay their subscriptions in a timely manner and leverage these resources to obtain additional funding from non-African investors to meet the mandate of the institution.
Shareholders also concluded that Shelter Afrique’s governance structures needed strengthening and called for improved communication between the Board and the General Assembly and annual evaluation of Board members performance.