With the current cumulative housing deficit reaching over 50 million housing units and growing, there is need for sustained impetus and collaboration amongst key partners and players in the housing industry to bridge the gap.

 As a pan African supranational institution created to support member countries in solving this challenge, Shelter Afrique believes that with the right funding structure, effective collaboration, and smart partnerships amongst the states, private sector players and multilateral development funding agencies, the objective can be achieved progressively.

The key, however, lies with mobilization of the right and quality funding structure, and effective and honest deployment of the borrowed funds into the respective targeted housing programmes. 

The right and quality funding structure would entail key parameters such as longer-tenure financing, low interest rates, adequate grace periods, sufficient quantum, and funding that is readily available and easily accessible.

Over the years of providing such funding to a diverse set of real estate developers and state-owned agencies in African countries where we operate, Shelter Afrique has observed that to guarantee an effective and honest deployment of borrowed funds into the targeted affordable housing programmes; the receiving institutions (whether developers or state-owned agencies) must embody good corporate governance practices.

Simply put, the institutions must be seen and perceived to be governed properly, with values and norms that espouse good governance structures and practices.

Key fundamentals 

What, then, is good governance in the context of mobilization of appropriate and quality debt capital?  

The answer lies in three key fundamental factors that include: having the right governance structures; the right governance processes, systems, and tools; and the right sustained practice that depict good governance. 

Having the right governance structures involves designing and institutionalizing structures that include but not limited to a board of directors, board sub-committees, executive management committee and sub-committees, business functions and internal audit. 

These structures are important - and they give life to a company. They are the engines that drive the business and therefore must be structured in accordance with best practice standards that underpin the industry. 

Global corporate governance standards such as the OECD Principles of Corporate Governance together with King IV Code of Governance amongst others are key in shaping up the design and framing of these structures and institutions should look beyond their industry and regulatory requirements.

 As a lender, and the same would apply to other potential lenders in the debt and capital markets, Shelter Afrique always strives to associate with companies that demonstrate sustained appetite and commitment towards strengthening their corporate governance structures by strictly adhering to the laid down statutory laws governing their establishment, their day–to-day operations, and the constitution and operations of boards of such organisations. 

Instituting the right governance processes, systems, and tools involves designing and developing an appropriate business strategy, incorporating a best fit organization structure that helps drive the strategy, and instituting a robust and appropriate business performance management system that tracks performance against the set strategic objectives. 

Adopting and conducting regular board evaluation exercises, designing and documenting business processes and procedures, putting in place the right business continuity and resilience management systems, and having a code of ethics and conduct are also key in instituting good governance.

Once an organisation has instituted a good governance structure sustained implementation of good governance practices is critical.

 This can be achieved by enhancing staff awareness of the company's corporate governance structures, processes, systems, and tools; enforcing the good corporate governance culture in the company as a way of life; keeping the board, senior management, and staff accountable for the company's performance and their actions; and carrying out regular audits, reviews, and reporting on the company's corporate governance practices.

 Any institution that sustainably institutionalizes these factors and progressively strengthens their effectiveness, will fundamentally be an attraction to funders (lenders) including Shelter Afrique. 

Those characteristics speak to a key concept in credit management called "Character." The Character of a borrower is fundamental to determining the creditworthiness of a customer as it discerns the willingness of the borrower to repay the credit once advanced.

 Therefore, the above characteristics present immense opportunities to the private sector players (developers) in the affordable housing space to re-align their governance systems and practices with a view to attracting quality and affordable credit. 

Mr. Oketch is the Head of Enterprise Risk Management at Shelter Afrique.