Africa gets its own credit rating agency. Its first test will be whether it can say no.
The African Union-backed AfCRA, based in Mauritius, is meant to offer an alternative to Fitch, Moody's and S&P — and to bring down what the continent pays to borrow.
Port Louis — An African credit rating agency backed by the African Union was due to launch on Wednesday 7 October, after nearly a decade of talks, Africanews and the AFP news agency report.
The Africa Credit Ratings Agency, known as AfCRA, will assess the creditworthiness of countries, businesses and institutions. It is based in Mauritius, chosen in part for its established financial services industry.
Why it exists
The agency is intended as an alternative to the three global firms that dominate the business — Fitch, Moody's and S&P — which African governments have long accused of underrating the continent's economies. Lower ratings mean investors charge more to lend.
The Organisation for Economic Co-operation and Development estimates that in 2024 Africa paid about nine dollars for every $100 borrowed on international markets, compared with about $4.70 for emerging markets in Asia and $6.50 in Latin America.
The African Peer Review Mechanism, the body behind AfCRA, says 23 African countries have no rating at all from the traditional agencies. Analysts quoted in the report add that standard models can miss the continent's large informal economies, which do not show up easily in official data.
Nigeria's President Bola Tinubu welcomed the agency last month, saying Africa was asking for fair ratings rather than favourable ones.
The credibility question
AfCRA's founders say governments will not interfere in its work. Analysts told AFP that investors will watch for one thing above all: whether the agency is prepared to downgrade an African government. If it is not, they warned, markets are likely to treat its ratings as advocacy rather than analysis.
This report is based on reporting by Africanews and AFP.
