Key takeaways:
- The African Credit Rating Agency will officially launch on October 7 in Mauritius
- Just three African countries currently hold investment-grade ratings despite the continent’s fast growth
- A 2023 UNDP report found rating “idiosyncrasies” cost Africa $75 billion annually in excess interest and foregone lending
Africa’s first continent-wide credit rating agency will officially launch on October 7 in Mauritius, the African Union (AU) announced on Tuesday.
The African Union disclosed the launch date in a post on X, describing the African Credit Rating Agency, headquartered in Mauritius, as a “historic milestone for financial sovereignty.”
The AU said the agency was created to offer “context-driven credit opinions for sovereign and corporate entities,” addressing what it called an unfair risk premium African nations have long paid on global capital due to skewed risk perceptions.
On his part, Nigerian President Bola Tinubu welcomed the announcement, tying it to arguments he has made publicly for months.
“In February, I made the case in the Financial Times for an African credit rating agency. In May, at the Africa CEO Forum in Kigali, I spoke again about the need for Africa to build financial institutions that understand our economies and can assess our risks properly,” Tinubu said.
“Africa is not asking for favourable ratings. We are asking for fair ratings, grounded in our fundamentals and in the reforms our economies are actually carrying out,” Tinubu added.
Why African leaders say the current system falls short
In his February Financial Times op-ed, Tinubu argued that Fitch, Moody’s and S&P Global Ratings, the three dominant global agencies, wield outsized influence over Africa’s access to international capital despite consistently misjudging the continent’s risk.
He noted that just three African countries currently hold investment-grade ratings, even as the IMF projects Africa to be the world’s fastest-growing region this year.
Tinubu cited a 2023 UN Development Programme report finding that rating “idiosyncrasies” cost Africa $75 billion annually in excess interest and foregone lending.
He argued the Big Three’s limited on-the-ground presence leaves too much weight on subjective “analyst discretion” around political risk and institutional strength, judgments he said fail to capture local realities and often trigger swift, broad downgrades when global commodity cycles turn, even when a country’s reserves and fiscal buffers remain solid.
A complement, not a replacement
Tinubu pointed to Nigeria’s own recent ratings upgrades as evidence of what better data and reform can achieve, citing improved economic statistics, the formal inclusion of previously off-balance-sheet central bank lending in public debt figures, GDP rebasing, fuel subsidy removal and exchange rate liberalization.
He noted Nigeria’s November dollar-denominated bonds were oversubscribed 5.5 times, yet said the country’s ratings still lag behind its reforms and market sentiment, a delay he said hits smaller African countries with less analyst coverage even harder.
Tinubu said the new agency is not meant to replace the established raters but to complement them, by identifying reform progress in real time and serving as an early signal to markets and to the Big Three themselves. “AfCRA must now earn the confidence of global capital. That confidence will rest on its independence and the rigour of its work,”
Tinubu said, adding that affordable access to credit will shape whether Africa can capitalize on a demographic boom set to give it a quarter of the world’s working-age population by mid-century.
