A new Africa-led credit rating agency is set to begin operations by the end of September 2025, aiming to offer an alternative to the global “big three” agencies, Fitch, Moody’s, and S&P.
Known as the African Credit Rating Agency (AfCRA), the institution will issue its first sovereign rating by late 2025 or early 2026, according to Misheck Mutize, lead expert on credit rating agencies at the African Peer Review Mechanism (APRM), a structure under the African Union.
AfCRA is currently in the final stages of selecting a Chief Executive Officer, with a shortlist already in place and an appointment expected in Q3.
A continental response to global criticism
The creation of AfCRA is a response to long-standing frustrations from African policymakers over how global agencies assess the continent’s credit risks.
- Countries like Ghana and Zambia have publicly condemned multiple downgrades that, they argue, contributed to rising borrowing costs and eventual defaults.
- In a recent example, the APRM challenged Fitch Ratings over its downgrade of the African Export-Import Bank (Afreximbank), accusing the firm of a flawed analysis and a poor understanding of African financial institutions.
- Fitch defended its methodology, saying its decisions follow globally consistent and transparent criteria.
Independence at the core
To guard against political interference and maintain credibility, AfCRA will not be owned by African governments, Mutize emphasized.
“This was designed to maintain independence and avoid conflict of interest. Shareholding will mainly be African private-sector driven entities,” he said.
AfCRA plans to 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.
He also stressed that AfCRA is not being set up to issue overly favorable ratings for African countries.
“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,” Mutize said.
What you should know
Nairametrics reported that the United Nations Economic Commission for Africa (ECA) declared that African countries continue to face exorbitant borrowing costs as global credit rating agencies assign them “sub-investment grade” or “junk” ratings that do not reflect the continent’s true economic potential.
The Executive Secretary of the ECA, Claver Gatete, who raised this concern in a statement on Friday, highlighted the staggering disparity in borrowing costs between African nations and developed economies.
- Gatete revealed 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 Gatete, most major credit rating agencies—including Moody’s, S&P, and Fitch—are headquartered outside Africa and often assess the continent’s economies through an external lens.
- Critics argue that these evaluations frequently overlook local political, social, and economic dynamics, leading to overly pessimistic ratings.
