The African Union will launch the continent’s first credit rating agency on Wednesday, seeking to provide an alternative \u200cto the “big three” global ratings agencies as debt burdens weigh on many African economies.<\/p>\n
The Africa Credit Rating Agency (AfCRA) \u2014 the creation of which African leaders endorsed in 2018 \u2014 will be launched in Port Louis, the capital of Mauritius, where it will be based.<\/p>\n
“AfCRA complements existing global credit rating agencies by offering a \u200bperspective rooted in African data, expertise and realities,” the AU said in a statement.<\/p>\n
African leaders have long accused Western \u200bratings agencies including S&P, Moody’s and Fitch of failing to fairly assess the risk of lending to African \u2060countries and of moving too quickly to downgrade them during crises such as conflicts and pandemics.<\/p>\n
The agencies reject that criticism, saying they \u200bapply the same methodologies globally.<\/p>\n
A 2024 Reuters investigation into Africa’s debt crisis found no evidence of systemic bias in the sovereign ratings assigned to \u200bthe region by the three major global credit rating agencies.<\/p>\n
CREDIBILITY TEST IN TIMES OF CRISIS<\/strong><\/p>\n Rating experts said the success of the initiative will hinge on the perceived credibility of the new agency, especially in times of crisis.<\/p>\n “A new rating agency begins with a promise while investors ultimately require a track record,” \u200bsaid Dennis Shen, a lecturer in finance at the International School of Management in Berlin and former sovereign analyst at Scope Ratings.<\/p>\n “The \u200bhardest test, however, will come when markets are under stress, because a rating agency\u2019s credibility is tested most severely when its conclusions are uncomfortable \u200crather than \u2060when it is highly convenient.”<\/p>\n AfCRA may provide a counterweight to established rating agencies, but it must meet global standards, former Nigerian Vice President Yemi Osinbajo said.<\/p>\n “It can’t just be a chauvinistic or nationalistic agency,” he said.<\/p>\n BORROWING COSTS IN FOCUS<\/strong><\/p>\n AfCRA, which will rate sovereign borrowers, financial institutions and private companies, will operate independently and be funded through shareholder capital and its operations, the AU said. It did not \u200bprovide details about the shareholders.<\/p>\n The AU says \u200bthe agency should help improve \u2060African countries’ access to capital markets and provide investors with more balanced and context-specific assessments of economies across the continent.<\/p>\n It noted that African economies are currently rated B to B-minus on average, compared \u200bwith BB for other emerging regions, a gap the AU says can limit some investors’ participation \u200band raise borrowing \u2060costs.<\/p>\n The drive to improve borrowing terms for the continent has become more urgent following years of increased government borrowing, pushing some countries into debt distress in recent years.<\/p>\n “The stakes are significant,” the AU said, adding that the continent’s annual external debt service surged to $163 billion in 2024, \u2060from $61 billion \u200bin 2010.<\/p>\n In many countries, interest payments have exceeded the annual budgets for key \u200bsocial sectors such as health and education.<\/p>\n AfCRA is also expected to boost coverage, with 23 economies on the continent lacking a rating from the three big agencies, \u200bthe AU said.<\/p>\n","protected":false},"excerpt":{"rendered":" The African Union will launch the continent’s first credit rating agency on Wednesday, seeking to provide an alternative \u200cto the “big three” global ratings agencies as debt burdens weigh on many African economies. The Africa Credit Rating Agency (AfCRA) \u2014 the creation of which African leaders endorsed in 2018 \u2014 will be launched in Port […]<\/p>\n","protected":false},"author":6,"featured_media":21887,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":5,"jnews-multi-image_gallery":[],"jnews_single_post":{"subtitle":"","format":"standard","override":[{"template":"1","parallax":"1","fullscreen":"1","layout":"right-sidebar","sidebar":"default-sidebar","second_sidebar":"default-sidebar","sticky_sidebar":"1","share_position":"top","share_float_style":"share-monocrhome","show_featured":"1","show_post_meta":"1","show_post_author_image":"1","show_post_date":"1","post_date_format":"default","post_date_format_custom":"Y\/m\/d","show_post_reading_time":"0","post_reading_time_wpm":"300","post_calculate_word_method":"str_word_count","show_zoom_button":"0","zoom_button_out_step":"2","zoom_button_in_step":"3","show_post_tag":"1","show_comment_section":"1","number_popup_post":"1","show_post_related":"1","show_inline_post_related":"1"}],"image_override":[{"single_post_thumbnail_size":"crop-500","single_post_gallery_size":"crop-500"}],"trending_post_position":"meta","trending_post_label":"Trending","sponsored_post_label":"Sponsored by","disable_ad":"0"},"jnews_primary_category":[],"jnews_social_meta":[],"jnews_override_counter":{"view_counter_number":"0","share_counter_number":"0","like_counter_number":"0","dislike_counter_number":"0"},"footnotes":""},"categories":[1116,32,2362],"tags":[5516,49],"class_list":["post-22216","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-african-union","category-economy","category-featured","tag-africa-credit-rating-agency-afcra","tag-african-union"],"_links":{"self":[{"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/posts\/22216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/comments?post=22216"}],"version-history":[{"count":2,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/posts\/22216\/revisions"}],"predecessor-version":[{"id":22218,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/posts\/22216\/revisions\/22218"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/media\/21887"}],"wp:attachment":[{"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/media?parent=22216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/categories?post=22216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/qiraatafrican.com\/en\/wp-json\/wp\/v2\/tags?post=22216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}