The African Union is set to launch Africa’s first homegrown credit rating agency on Wednesday, seeking to challenge the dominance of Moody’s, S&P Global Ratings and Fitch Ratings in the continent’s credit market.
The Africa Credit Rating Agency, AfCRA, will be headquartered in Port Louis, Mauritius, where the AU plans to formally launch the agency.
The initiative has been nearly a decade in the making, with the African Union pushing since 2017 for a homegrown alternative to the major international rating agencies.
The AU has repeatedly criticised international rating agencies over what it considers overly negative assessments of African economies.
A 2023 United Nations Development Programme study estimated that subjective elements in sovereign credit ratings may have cost African countries up to $74.5 billion through higher borrowing costs and missed financing opportunities.
The three major global agencies dominate the credit ratings market, accounting for an estimated 95% of global business.
African governments and the AU have raised concerns that countries can be downgraded quickly during periods of economic stress but take longer to receive upgrades.
The agencies have rejected claims of systemic bias, saying they apply the same methodologies across countries.
AfCRA is expected to rate sovereign borrowers, financial institutions and private companies, using African data, regional expertise and economic conditions in its assessments.
The AU says the agency will operate independently and be funded through shareholder capital and its own operations.
It is also expected to expand credit rating coverage across Africa and help more issuers access capital markets.
Only 32 of Africa’s 55 countries currently have ratings from the three major international agencies, leaving 23 without coverage.
The new agency comes as African countries face rising debt-service costs.
The AU said Africa’s annual external debt service increased to $163 billion in 2024 from $61 billion in 2010.
It added that interest payments in some countries now exceed annual spending on health and education.
AfCRA will also retain the option to rate non-African entities, subject to approval by its management.
The AU says the agency’s use of regional data and expertise will provide investors with assessments that better reflect African economic realities while helping countries improve access to capital.
Erizia Rubyjeana
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