Cridem: Can you tell us a few words about your background?

Westbridge is a small Canadian financial institution, specializing in real estate credit, and construction financing in particular. It has existed since October 2004, as an internal subsidiary of Riskmont Institutional Loans Trading, an old securitization and mortgage trading firm.

Riskmont was sold to U.S. interests, and in 2014 we outsourced Westbridge, first to Ottawa before relocating to Calgary in Western Canada. James Clayton and I are the main shareholders and chief executive officers, and we have made a pivot since 2017 by refocusing our activities and our thirty years of banking experience gradually on Africa, which now accounts for 93% of our activities.

In addition to Riskmont and Westbridge, we founded and managed banks such as Bridgewater Bank (in Alberta) and SBB Bank, which were sold to leading groups.

Cridem: You are the main leaders of Westbridge Mortgage REIT, what are its main activities and why did you choose to invest in Africa by starting first in Ivory Coast (with the acquisition of the Banque de l'Habitat de Côte d'Ivoire (BHCI) in 2017, and now acquisitions in Mauritania and Rwanda where you are in the process of setting up your group's Holding Africa?

Westbridge is what we call a "specialty lender", a financial institution focused almost exclusively on a specific core business, real estate, in our case. This is what we have been doing for decades, and it is precisely this sharp specialization that we "export" to certain parts of Africa where there is a cruel lack of specialized institutions.

The acquisition of BHCI in Côte d'Ivoire, which took place in August 2017, met this objective. When we are a specialized "monoline", it is crucial to have scale in our operations from the start, and this is what explains our interest in the common market that is the WAEMU. Côte d'Ivoire is the lungs of this market, so starting with this country was one of the best ways to achieve a critical mass in production.

Cridem: What assessments do you have of these first months of activity since the takeover of BHCI? Are things moving in the right direction?

With the BHCI, we are not far from the first months. The deal was sealed in August 2017 and we made an exit at the end of 2019, so two and a half years. For a small Canadian firm that has never invested in Africa, the acquisition of BHCI was a real baptism of fire for us..... A summary of what a foreign investor can expect to experience in Africa. A buoyant market, solid returns, extraordinary potential, but also all the difficulties of operating in a French-speaking African country.

It is a "turnaround story" that has not been completed, but which has given good results from the start. A state bank undercapitalized for a decade, a hard-working but demoralized and underpaid staff, negative growth, and a balance sheet burdened by a mass of bad and contentious debts. Two years later, a first recapitalization has brought the bank up to speed, from a regulatory point of view, the staff has increased from 174 to 280 employees, the average salary increase of 28.8%, and a growth in outstanding assets of more than 30%....... for the rest, wait and see.....

Cridem: In general, real estate financing remains a crucial issue in Africa, Mauritania and Côte d'Ivoire in particular? In your opinion, what are the major constraints? Is it the lack of capital or the absence of bankable projects?

Paradoxically, it is neither a lack of capital nor a lack of bankable projects that poses a problem in terms of real estate financing in most countries of the continent. From Durban, to Kigali, to Ndjamena, Abidjan or Nouakchott, there is a growing number of local and foreign investors who are eager to finance solid projects led by experienced and credible promoters. And you have more and more developers returning to the continent rich in experience in North American, Asian or European real estate.

The real major obstacle remains corruption and the lack of security in terms of safety and guarantees. In the majority of these countries, the risk of expropriation is considerably higher than the real credit risk. As long as in these countries a General, a minister or powerful bureaucrat can at any time appropriate real estate (or movable) property that does not belong to him, you should expect that real estate players will be reluctant to invest, and banks even more reluctant to enter the sector with conviction. Respect for individual ownership is a basic element of the functioning of a normal economy, and it is currently one of the major obstacles to real estate development in many countries of the continent.

Cridem: The world is now impacted by Covid19, don't you think that this pandemic will have serious consequences on the real estate financing sector in Africa?

Covid19 will cause a brake on investment in general, in Africa and elsewhere. This is likely to result in a widespread economic slowdown. Real estate values are not the same in an environment of GDP growth at 6 or 8% compared to an environment of less than 2% GDP growth.

Valuations of real estate assets will therefore suffer, but there will always be certain niches that will offer opportunities for higher returns at moderate risk. You take medium or high standing rental real estate in a city like Kigali, so-called "industrial" real estate (logistics, transport) around the Mombasa-Nairobi railway line or hotels around medium-sized cities such as Saint-Louis in Senegal or a major offshore gas development project starts, project that will also affect neighboring Mauritania, in terms of storage real estate for example. From our perspective, these are promising segments and opportunities even in a context of low economic growth.

Cridem: What are Westbridge's African prospects? Do you have other projects on the continent?

In Africa, Westbridge is a player in the acquisition of distressed assets or institutions. This is the modus operandi behind our Africa strategy. We are open to opportunities where the risk-return ratio seems reasonably in line with our acquisition and transaction parameters. And the economic slowdown we see will emerge more and more opportunities for which we are preparing.

As you noted above, we are setting up the Africa holding company of our operations in Kigali, Rwanda. The most recent of our acquisitions is NBM, a bank with 200 employees and 27 branches in Mauritania, and we believe that this puts us in pole position for the development of offshore gas that this country will experience from 2022 and which will attract many Canadian firms specializing in the field.

Interview by Babacar BAYE NDIAYE