The African Union (AU) at the weekend announced the launching of the African Credit Rating Agency (AfCRA) in furtherance of its efforts towards using home-based socioeconomic parameters to appraise the performances of the continent’s economies and rating them based on the defined assessment parameters.
Specifically, the rating agency aims to provide a fair, transparent, and unbiased credit rating system that reflect the realities and potential of African economies, thereby addressing the biases of global rating agencies which have reportedly cost Africa over $75 billion in investment opportunities.
Speaking during the launching of the agency at an AU event in Addis Ababa, Ethiopia on Friday, Kenya’s President, William Ruto, noted that over the years “global credit rating agencies have not only dealt us a bad hand, they have also deliberately failed Africa.”
He criticized the flawed models, outdated assumptions, and systemic bias used by global rating agencies, which had been painting an unfair picture of African economies and leading to distorted ratings, exaggerated risks, and unjustifiably high borrowing costs.
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According to him, the unveiling of the AfCRA is a response to the long-standing grievances of African countries regarding the unfair ratings of most of the economies by international credit rating firms with a view to replacing them with development-focused credit ratings.
The Kenyan leader projected that improving Africa’s rating by one notch could unlock $15.5 billion in additional funding from development partners and other global financing organisations for the continent.
It would be recalled that the clamour for creating an African credit rating agency had been gaining momentum at different for among African leaders over the past few years, following which the AU announced its plans to change the narrative of the project in September 2023.
Before the AU’s announcement, the agitations for the establishment of an African credit rating agency spiked in 2022 when the immediate past president of Senegal, Macky Sall, advocated the need for a new system to end the foreign rating agencies’ injustices to African countries.
