Africa to Launch Long Awaited Continental Credit Ratings Agency in October

By Adedapo Adesanya

The African Peer Review Mechanism (APRM), an African Union-backed initiative, will launch a continent-wide credit ratings agency in October as part of efforts to reduce borrowing costs for African countries.

Mr Paul Sikazwe, technical adviser on debt to the African Union Commission, said the agency would be launched in Mauritius on October 5. This is coming after years of delays.

Mr Sikazwe disclosed this on Wednesday during a conference on debt and development in Nairobi, Kenya, organised by campaign group AfroDad.

“This is a sign of progress in our ambition to provide momentum for the reform of the international financial architecture,” he said.

The APRM has been working for several years to establish an agency that will assess the creditworthiness of African sovereigns, providing an alternative to ratings from major global agencies including Fitch, Moody’s and S&P Global.

The new company will focus on local-currency debt ratings to help support the development of domestic capital markets and reduce foreign currency risk on the continent. It was previously touted as African Credit Rating Agency (AfCRA).

African leaders have repeatedly criticised the major Western ratings agencies, arguing that they do not adequately reflect the risks associated with lending to African countries. They have also accused the agencies of being more likely to downgrade African economies during crises such as conflicts and pandemics.

In past years, African leaders, including Kenyan President Ruto and former Senegalese President Mr Macky Sall, have accused the foreign ratings companies of bias and a lack of transparency. Ghana and Zambia have also made criticisms.

The global ratings agencies have rejected the criticism, maintaining that they apply the same rating methodologies across countries and regions.

The move comes as debt pressures remain a major concern across Africa, with heavy borrowing, economic mismanagement and external shocks contributing to sovereign defaults in countries including Zambia, Ghana and Ethiopia.

Mr Sikazwe also said the African Union was advancing efforts to coordinate debt action among its 54 member states.

He said the African Monetary Institute (AMI) would be inaugurated in Abuja in late October, describing the institution as a precursor to the establishment of a regional central bank.