In furtherance of recent clamours by African governments and economists, the African Union (AU) is spearheading the launch of new Africa-led credit rating agency by the end of September 2025 with a view to providing alternative performance indices on Africa’s economies aside from those being provided by global agencies, particularly Fitch, Moody’s, and S&P.
To be known as the African Credit Rating Agency (AfCRA), the agency when it becomes operational be issuing its first sovereign rating by late 2025 or early 2026.
This plan was disclosed by the lead expert on credit rating agencies at the African Peer Review Mechanism (APRM), a structure under the African Union (AU) Misheck Mutize, at the weekend.
Currently, the proposed rating agency is in the final stages of selecting a Chief Executive Officer, with a shortlist already in place and an appointment expected in Q3.
Analysts believe that the establishment of AfCRA will be a response to long-standing frustrations from African policymakers over how global agencies assess the continent’s credit risks.
Recently, countries like Nigeria, Ghana and Zambia had rued the multiple downgrades by the foreign rating agencies, accusing them of contributing to rising borrowing costs and eventual defaults of boorowers.
For example, the APRM challenged Fitch Ratings over its downgrade of the African Export-Import Bank (Afreximbank), accusing the agency of a flawed analysis and a poor understanding of African financial institutions.
As expected, Fitch defended its methodology, saying its decisions follow globally consistent and transparent assessment criteria.
Mutize maintained that to avert the politicization and maintain credibility, of the proposed agency’s operations, the promoters will not allow African governments to own it.
He clarified: This was designed to maintain independence and avoid conflict of interest. Shareholding will mainly be African private-sector driven entities.”
The promoters of the rating agency indicated that it would focus primarily on local-currency debt ratings, which Mutize believes will play a critical role in strengthening Africa’s domestic capital markets and reducing overreliance on foreign currency-denominated debt.
This is even as he maintained that the agency was not being set up to issue overly favourable ratings for African countries, adding that “it is important to debunk the assumption that AfCRA is being established to give favorable ratings to Africa, no. We will issue downgrades where necessary.”
It would be recalled that United Nations Economic Commission for Africa (UNECA) last Friday expressed its concern that African countries had been facing exorbitant borrowing costs as global credit rating agencies continued to assign them “sub-investment grade” or “junk” ratings that didn’t reflect the continent’s true economic potential.
The Executive Secretary of the UNECA, Claver Gatete, who raised this concern in a statement, highlighted the staggering disparity in borrowing costs between African nations and developed economies, describing the situation as undesirable for the sustained drive to boost the global economic performance.
For instance, Gatete noted that while a country like Germany can borrow $1 billion at just 2.29%, paying about 229 million dollars in interest over 10 years, a country like Zambia, under current conditions, will pay up to $2.25 billion for the same amount, almost ten times more.
According to him, most major credit rating agencies—including Moody’s, S&P, and Fitch—are located outside Africa and often assess the continent’s economies through external assessment parameters.
