Shelter Afrique is in stormy waters over bad loans. According to Kenya’s Business Daily, Shelter Afrique’s CEO James Mugerwa, has been dishing out subprime mortgages to unqualified borrowers resulting in a steep rise in the company’s non-performing loans.
At least 59 per cent of Shelter Afrique’s $246.3 million (Sh24.63 billion) loan book was classified as non-performing by February 2016, according to documents addressed to the lender’s board of directors and financiers.
Shelter Afrique is also said to be borrowing to pay debt and not to finance new investments or lending, turning it into a pyramid or Ponzi scheme.
Kenyan taxpayers control 10.63 per cent of Shelter Afrique, which is owned by a total of 44 African countries together with the African Development Bank and African Reinsurance.
Housing and Urban Development principal secretary Aidah Munano represents Kenya on the Shelter Afrique board.
The list of Shelter Afrique’s big debtors includes Nairobi’s Taj Mall, Translakes Estate in Kisumu, Eden Beach Resort in Shanzu, and Oakpark Properties’ Pine City in Athi River.
Consequently, Shelter Afrique has seized 11 apartments at Eden Beach, 17 houses and land belonging to Oak Park under an “asset swap programme” and has classified these properties as “held for sale.”
Mr Mugerwa is further accused of wasteful and questionable spending that has seen him vary by more than three-fold the cost of repairs at his residence, splurging more than €30,000 on house furniture which internal auditors couldn’t trace, making double per diem claims for foreign trips, buying six smartphones in eight months, and arbitrarily sacking junior staff.
The Shelter Afrique boss’ profligate spending is evidenced by the Sh739,010.14 phone bill he incurred in the month of May 2015 for one of his mobile phones, according to a postpaid bill from Safaricom.
