West Africa Rating Agency: Working towards greater development in African continent


As a CEO, how has your journey been at WARA?

I am a founding shareholder of West Africa Rating Agency, in short WARA, established in 2012 in Dakar, Senegal. When late Seydina Tandian and I created the first credit rating agency in West Africa, I stood as its Chief Credit Officer (CCO), responsible for rating criteria, methodologies, policies and procedures and, obviously, leading the nascent analytical team in actually assigning the ratings. I also chaired rating committees.

Seydina, my friend and business partner, was the CEO back then. But when he suddenly and sadly passed away in August 2018, WARA’s Board of Directors asked me to take over as CEO, I accepted the challenge, named a new CCO hired in Paris and decided to give the rating agency a new face, voice and identity. We changed almost everything except people and methodologies. We created a new brand and logo, reshuffled our website and deeply revised our structure, organization and strategy.

From a strategic perspective, we understood that the most relevant scale for credit ratings in Africa was actually the continent, not just French-speaking West African nations. That is why we accepted GCR’s offer to start discussing about a common future which eventually led GCR Group, in January 2021, to acquire a majority stake in WARA, which is being renamed into GCR West Africa as we speak.

Will you please narrate the inception story of WARA?

Before becoming a friend and business partner, late Seydina Tandian was a seasoned banker in Senegal. In the course of his banking business from the late 1990s to 2007 when he quit banking, Seydina faced with the big challenge of lacking credit information about counterparts, including large corporate entities. He formed in his mind the idea and soon the conviction that a credit rating agency needed to be established in West Africa, which is actually a monetary union of eight nations (WAEMU) with one single central bank (BCEAO) and one single capital markets regulator (CREPMF).

Seydina had the will and the capital to start such a credit rating agency but he was lacking two things: on one hand, the technical skills and on the other hand a regulatory framework for rating agencies to thrive in the region. Therefore, as he lobbied the regulators in view of the emergence of a robust regulation on rating agencies, he contacted me whilst I was a Vice President and Senior Credit Officer at Moody’s in Paris to offer me to join him in this wonderful initiative. I decided to quit Moody’s in 2011 and establish WARA with him, as a shareholder and CCO.

WARA Organization Chart

Regions and Industries covered

Geographically, WARA primarily covers the eight member countries of the West African Economic and Monetary Union (WAEMU) which are: Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo. As far as industries are concerned, WARA is no different from any other credit rating agency elsewhere. We can rate industrial and service corporate entities, financial institutions (banks, multilaterals, insurance companies and asset management firms), sovereigns, local governments and project companies.

In the corporate space, obviously our ratings reflect the sectoral composition of the West African economies, dominated by the agro-industrial, downstream oil and gas, telecom, trade and logistics sectors. WARA is also the only West African rating agency capable of assigning ratings to securitization transactions in the structured finance space. WARA also assigns management quality ratings to asset and fund managers, as well as green bond ratings.

Can you provide us with the information on your methodologies?

We distinguish between two sets of methodologies. For corporates, banks and similar financial institutions, insurance companies, holding entities, we use GCR Group’s rating criteria, which basically always combine four factors: i) the operating environment, ii) the entity’s business profile, iii) the entity’s financial profile, and iv) a peer analysis. For sovereigns and securitization transactions, which are very peculiar cases, we use specific methodologies only applicable by WARA in the West African region.

For sovereigns, we use three criteria to gauge the creditworthiness of a given government: i) macroeconomic, structural competitiveness and attractiveness indicators; ii) governance indicators; and iii) cyclical economic policy indicators capturing fiscal, monetary and external liquidity indicators. Finally, for securitization transactions, we use stressed, stochastic and dynamic asset quality and liquidity models to measure the diversified expected loss of securitized assets.

We would like to know about your Rating scale.

In West Africa, WARA as GCR’s regional subsidiary applies two rating scales. The most important one is the regional rating scale applicable in WAEMU, as our priority is to rate bond issuances denominated in regional currency, i.e. the CFA Franc (XOF). This rating scale goes from AAA down to D, and is similar to any other credit rating scale used elsewhere in the world. We can also assign global scale ratings in WAEMU, but usually such ratings would be capped in the BBB category given the prevalence of non-transfer (i.e. external liquidity) risk factors pertaining to the challenges of accumulating foreign exchange reserves.

Tell us about your Team.

I describe my team as the “wonderful family”. Most of my team have been around since inception, although we’ve been hiring several new members recently. My team includes all ages, genders, backgrounds, skills and competencies. I am very proud of the fact that complementarity is the key word and that nobody is ever left alone struggling when a challenge arises. Mutual support is permanent.

We are not a big company and therefore the early start-up spirit still prevails, with lean management and structure, a tendency to delegate a lot, fluidity in communication, an obvious taste for challenges and new ideas, flexible organization, a sense of individual responsibility and above all the desire of excellence. Respect, exemplarity, solidarity, sincerity and transparency help keep an open mind, feel safe, avoid toxicity and grow healthily.

Tell us something about GCR Ratings.

In January 2021, GCR Ratings, the pan-African, unchallenged leader in the credit rating business took over WARA, after it acquired 65% of WARA’s capital from the heirs of Seydina Tandian, who kept a minority stake of 20% in the company. With a 24-year track record, GCR has developed a very substantial, market leading pan African credit ratings business, encompassing over 500 credit ratings across 22 countries in Africa.

GCR is licensed as a rating agency in a number of markets, including Kenya with the Capital Markets Authority, Nigeria with the Securities and Exchange Commission, Zimbabwe with the Reserve Bank of Zimbabwe and Mauritius with the Financial Services Commission. In South Africa, GCR is registered as a Credit Rating Services Provider by the Financial Services Conduct Authority. GCR is also recognised as an eligible External Credit Assessment Institution (ECAI) by the South African Reserve Bank and the Bank of Mauritius.

We are honoured, proud and happy that the GCR Group has chosen us as their West African arm. Our integration into the GCR Group is almost complete, as only one thing remains to be done, i.e. changing our name from WARA to GCR West Africa, a task that is currently being tackled. The Group provides us with tremendous support in terms of criteria, methodologies, processes, financial management, training, communication, compliance, IT, operations, quality management, marketing and outreach. We can also build on a brand name that has built itself for a quarter of a century.

Now that Moody’s has expressed interest in taking control over GCR, we are gradually becoming a part of the Moody’s galaxy, which is a great story to tell, and a fantastic opportunity to continue helping African capital markets to further deepen.

Can you guide us on environmental changes and their impact on the economic cycle?

In West Africa, all countries have more or less the same approach and framework for structural economic policies. The main objective is to reinforce the secondary, i.e. industrial sector from the primary, i.e. agricultural base. This is typically called the “incremental enrichment of the agro-industrial value add”.

Obviously, such a structural shift from raw, untransformed agricultural output to processed commodities does not go without major adjustments around them, including stronger governance, a clear rule of law, an easier environment for doing business, more efficient logistics, cheaper energy, available telecoms and, last but not least, finance. Banks’ balance sheets will not be in a position to cover for such a dramatic surge in financial needs; capital markets, especially bonds, will have to drive regional disintermediation to new heights… and this is where we come into play. Bonds must be rated in WAEMU; this is a regulatory obligation and we stand ready to perform our duty as an independent, credible, seasoned provider of credit intelligence through our ratings.

Which sectors are helping African nations to become economically prosperous?

In our West African societies, agriculture remains the backbone of most interactions. Although traditional agriculture fraught with low productivity will not be replaced overnight by larger agro-industrial companies, one can see the emergence of sizeable agro-industrial champions in the region. SIFCA Group is one of them, involved in natural rubber, palm oil and sugar out of Ivory Coast. Exporting their processed output makes it necessary to strengthen the logistics capacities and efficiency of our economies, meaning roads, storage facilities, ports and airports.

Logistics is meaningless without affordable energy and reliable telecoms, and all this would be a complete non-sense without affordable housing and sufficient education for people. Through infrastructural investments, governments still have a major role to play, in order to foster positive externalities; then the private sector can play its part, mobilizing domestic, regional and international finance to support industrial initiatives.

What changes have you noticed in business patterns due to covid19 pandemic?

There are two signs to the coin. On one hand, West African societies have been relatively less impacted by the pandemic: populations are younger and thus less fragile when infected by the virus; average temperatures are higher than in the North, leaving less space to the virus to contaminate large portions of the population; and the urban way of life where promiscuity is high remains largely unknown to us, with few exceptions. Therefore, West African economies have kept on active during the pandemic, although global markets, especially those of commodities, have been hard hit in the wake of lower global demand and a drastic, but temporary decline of trade traffic.

As a matter of consequence, the flip side of the coin was a higher level of public sector debt, questioning the ability of several government to keep a sustainable debt service ratio. Some African governments have defaulted.

Economic and social frustration has led to security issued in several countries, some of them in West Africa itself. Mali, Burkina Faso and even Benin have been severely shaken by violence, to the point where in Mali and Burkina Faso, the plague of coups has resurfaced. In response to social, economic and political challenges made more explicit by the pandemic, business leaders are visibly aware of the necessity to accelerate the structural transformation of our economies and countless initiatives are mushrooming across the board in the private sector. In West Africa, optimism is what keeps us strong.

How are you planning to expand your reach of operations?

In West Africa, our ratings business will be driven by the regulatory obligation to rate listed bonds, which are doomed to grow fast given banks’ limited capital size. In other words, organic growth will help lift our boat naturally with an expected inflation of bond issuances in WAEMU, in both the public and private sectors.

Interest rates remaining low in Europe, we will see more European underwriters acquiring West African bonds, even when they are denominated in regional currency as it is pegged to the Euro, thus limiting foreign exchange risk. Now, the rest of French speaking Africa is appealing to us.

On one hand, North Africa still lacks a rating agency. In particular, Morocco increasingly appears as a natural place to be, especially that now Casablanca has emerged as a regional financial hub. Algeria, provided it is equipped by an exchange, can also be quite attractive. Further South, Central Africa is deeply reforming its capital markets’ regulatory framework where credit ratings are explicitly mentioned.When applicable, this revised regulation of financial markets will become a strong incentive for us to set foot in the Central African Economic and Monetary Community, which is also a monetary union with a single currency (the XAF CFA Franc). It won’t be a surprise if, in the near future, GCR has a physical presence in Cameroun, the dominant economy of the region.

Year of Founding2012
Founding Members: Anouar Hassoune and Seydina Tandian
Office Locations: Dakar, Senegal
Company Strength: 1. West African rating agency regulated by the WAEMU capital markets authority named CREPMF;   2. WARA is a member of the GCR Group (https://gcrratings.com/) and stands as the Group’s West African subsidiary and its key arm for French-speaking Africa

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