S&P Global Ratings has rejected renewed allegations that it applies unfair or biased standards to African sovereign credit ratings, insisting that all countries are assessed using the same transparent and long-established criteria.
S&P’s global head of sovereign ratings, Roberto Sifon-Arevalo said in an interview on Thursday, as quoted by Bloomberg, while speaking on the sidelines of an S&P-hosted event at the G-20 summit in Johannesburg.
“We don’t treat Africa or Latin America or Asia — we don’t treat anybody differently. Our criteria, our methodology, has been public for decades now, and anybody can look at it,” he said.
Sifon-Arevalo rejected that notion, saying people were trying to compare African sovereigns with other economies that were structurally completely different.
“Sometimes when I speak with people looking at Africa specifically, their benchmark is Europe or the United States,” he said. “I rarely hear benchmarking themselves with Southeast Asia or Latin America.”
S&P’s ratings criteria and methodology have been public for decades, and anyone can replicate ratings assessments using them, Sifon-Arevalo said. Still, there is human judgment involved.
“Look, we’re people, we are entitled to opinions,” he said. “And our opinion might not be the same as others. We try to do our best.”
Backstory
Earlier this week, Reuters reported that a panel of Africa experts urged the Group of 20 major economies to step up oversight of credit rating agencies, which they accused of using flawed and opaque methodologies that increase borrowing costs for African governments.
The panel, established under South Africa’s G20 presidency, said in a report to the group that rating agencies exhibit “perception biases”, often assessing African risk as higher than other regions with comparable economic fundamentals.
What you should know
In February, the African Union announced the launch of its own rating agency, the African Credit Rating Agency (AfCRA), to address biases by global rating firms.
Kenya’s President, William Ruto, unveiled the new agency at an AU event held in Addis Ababa, Ethiopia.
A study by the Africa Peer Review Mechanism and the United Nations Development Programme highlights that biased grading has cost Africa about $75 billion in lost opportunities.
The idea of creating an African credit rating agency has been in the pipeline for years. In September 2023, the AU officially announced its plans to move forward with the project.
This decision comes after repeated criticism of the “Big Three” rating agencies—Moody’s, Fitch, and S&P—accused of applying a “negative bias” when assessing African economies.
