Africa launches new credit ratings agency to unlock 'unbiased' financing

This week saw the launch of a new ratings agency for the continent, the Africa Credit Rating Agency (AfCRA).

Under the umbrella of the African Peer Review Mechanism, the African Union says this new body is key to shaping the new global financial architecture.

The document points out that the credit rating industry is dominated globally by the three international entities - Moody’s, S&P and Fitch, all with a perceived bias against African countries.

"In a quest to either improve or maintain favorable sovereign credit ratings (SCRs), African states perceive that they must subject themselves to prescriptive fiscal and monetary policy recommendations from the international credit rating agencies (CRAs). Any government that crafts an economic policy that contradicts the contractionary prescriptive recommendations of the international CRAs consequently suffers the loss of being downgraded."

“We must rethink how creditworthiness is defined and measured” is how UNDP Africa chief economist Raymond Gilpin put it at a dialogue on the sidelines of the 2025 IMF-World Bank spring meetings.

A figure involved over many years with this aim is Sifiso Falala, President of ACRA.

In conversation with Stephen Grootes, Falala uses the example of weighting in relation to bias, part of the methodology used to determine a country's credit rating.

"With a lot of these rating actions, when financial information is collected it is subject to being weighted, or allocated a score that has a ceiling in a certain direction. The ceiling might be occasioned by a region, by the types of neighbours an economy has - and even if an African economy for instance is growing at an exceptional rate like in Ghana at the moment, you may find notwithstanding that fact, it may not be reflected in the ratings"

Falala emphasizes that the new body is an association of ratings agencies across the continent: "Because of that, the difference will be occasioned by our understanding of the economic imperatives and investment climate on the continent... and certainly the investment performance of the various sovereigns in relation to their ability to repair debts that they owe."

They believe that this difference will be reflected by an introduction of fairer measures, and more objective assessment of the performance of the various African countries as far as creditworthiness is concerned.

Scroll up to the audio player to hear more about the rationale of Africa having its own credit ratings agency