Africa Finance Corporation (AFC) says its newly secured ‘A’ long-term credit rating from S&P Global will lower its borrowing costs and strengthen its ability to expand infrastructure financing across Africa.
The assessment was disclosed by AFC’s President and Chief Executive Officer, Samaila Zubairu, in comments to Reuters, following S&P’s first-ever rating of the multilateral development finance institution.
The development comes as African lenders increasingly seek market-based funding to offset declining concessional financing and reduced Western aid flows.
The S&P rating places the Nigeria-backed lender firmly within the global investment-grade category, reinforcing its credibility with international investors and potentially improving access to cheaper capital.
What they are saying
Zubairu said the S&P rating represents an important validation of AFC’s financial strength and operating model, with implications for both the institution and its clients across the continent.
“This for us is validation of who we are that should translate into better market access,” Zubairu said, adding that the rating puts the lender “firmly in the investment-grade pocket” for most investors.
“That should, over time reduce cost of funding for us and for our clients on the continent,” he added.
According to the AFC CEO, lower borrowing costs will allow the institution to scale financing for priority sectors at a time when African economies face tightening global financial conditions.
More Insights
S&P Global cited AFC’s strong asset quality and very strong liquidity coverage as key factors behind the rating. In addition to the long-term ‘A’ rating, the agency also assigned the lender an A-1 short-term credit rating and a positive outlook, indicating the potential for future upgrades.
- AFC already holds an A3 rating from Moody’s, an AAAspc rating from S&P Ratings (China), and an A+ rating from the Japan Credit Rating Agency.
- S&P noted that its positive outlook reflects expectations that AFC will expand its sovereign shareholder base over time.
- The Central Bank of Nigeria (CBN) and Nigerian financial institutions currently account for about 75 per cent of AFC’s total shareholding, demonstrating Nigeria’s dominant role in the lender.
The S&P upgrade contrasts sharply with developments elsewhere on the continent, as Afreximbank was downgraded to junk status by Fitch, shortly after severing ties with the rating agency.
Why this matters
The rating upgrade comes at a critical moment for African development finance, as lenders face higher global interest rates, rising credit risks, and reduced access to concessional funding.
- An investment-grade rating improves AFC’s ability to raise capital at lower yields in international markets.
- Lower funding costs can translate into cheaper long-term financing for infrastructure, energy, and industrial projects across Africa.
- The rating strengthens confidence in African-led financial institutions at a time when external development finance is becoming more constrained.
For Nigeria, which remains AFC’s largest shareholder, the improved rating also reinforces the country’s indirect exposure to a stronger and more competitive continental lender.
What you should know
AFC is an infrastructure-focused multilateral development finance institution that plays a central role in funding large-scale projects across Africa.
- The bank invested about $4 billion in projects last year, and Zubairu said a stronger pipeline this year would see investments at or above 2025 levels.
- Priority sectors include gold mining, critical minerals, renewable energy, and fertiliser, reflecting Africa’s resource base and industrial needs.
- AFC is a key financier of the Lobito Corridor, a U.S.-backed railway project linking copper fields in Zambia and cobalt mines in the Democratic Republic of the Congo to Angola’s Lobito port, which is driving increased interest in mining and agriculture in the region.
In terms of funding, the lender plans to continue raising capital through international bond issuances, including sukuk, panda, and samurai bonds, while also exploring its first private credit funding deals as global investors search for higher yields in developing markets.
