The African Development Bank’s (AfDB’s) board of directors on Wednesday approved a $20-million trade finance line of credit to be provided to housing and habitat company Shelter Afrique (SHAF) to boost the availability of trade finance instruments to small and medium-sized enterprises (SMEs) involved in construction and real-estate-related activities in Africa.

“Economic growth, exponential urbanisation and a growing middle class are hampering the provision of adequate housing in Africa. The construction industry is growing at 20% a year, but this cannot sufficiently address the rising demand for housing partly due to a wide financing gap for construction and building materials,” the AfDB explained, adding that the public and private sectors had to date been unable to deliver sufficient resources to meet this expanding working capital requirement.

The AfDB’s four-year facility will allow SHAF to expand its trade finance programme, launched in June 2011, under a product diversification strategy to address the acute financing shortage facing real estate developers in Africa.

SHAF would also partner with other financial institutions offering trading finance services to SMEs in the real estate construction and building industry and those involved in trading/leasing of building materials and equipment.

“Through this contribution, AfDB would leverage SHAF’s market knowledge and networks across the continent and, hence, assist to alleviate some of the structural financing inefficiencies encumbering Africa’s real estate growth,” the AfDB said.

Therefore, this facility, boosting the availability of affordable housing in Africa through financial institutions' and SMEs' involvement, would enhance inclusive growth and private-sector development as espoused in the AfDB Long Term Strategy for 2013-2022.

Trade facilitation was one of the three strategic objectives of the Bank’s Regional Integration Strategy 2009-2012, as the AfDB sought to mainstream and institutionalise its engagement in trade finance development in Africa.