Africa Has Built Its Own Credit Rating Agency. Winning Trust Is the Hard Part.

Africa has launched its own credit rating agency to challenge Moody’s, S&P and Fitch, which dominate roughly 95% of the global ratings market. But with the continent facing $163 billion in annual external debt service and an estimated $75 billion in excess interest costs, the Africa Credit Rating Agency faces a harder task than its launch: convincing investors that its ratings are independent, credible and comparable with global benchmarks.

On the evening of Oct. 7, in Balaclava, a town north of the Mauritian capital, Port Louis, Africa formally opened something it had spent the better part of a decade trying to build: a credit rating agency of its own. The ceremony was scheduled to run three hours, according to the media advisory, and it drew African Union leadership, ministers and financiers to an island that has long sold itself as the continent’s financial hub.

The Africa Credit Rating Agency, or AfCRA, is described by the United Nations as an independent, private sector driven institution meant to bring more data and local knowledge into the assessment of African economies. It will rate governments, but also companies, subnational borrowers and other institutions. Its backers are careful to say it will complement the world’s established agencies, not replace them.

Then came a note of caution from the very top. Mahmoud Ali Youssouf, chairman of the African Union Commission, told the audience that a rating agency “will certainly not significantly reduce the cost of capital” in the near future, and called for broader reforms of global markets. It is an unusual way to launch an institution that was sold, for years, as a remedy for expensive debt. He was equally blunt about what the agency needs to survive: “Yes, the Agency must be independent for the sake of its own credibility.”

A $75 Billion Grievance

To understand why governments pushed so hard for the agency, start with what a rating does. It is a signal to bond buyers about the odds of being repaid, and that signal turns directly into the interest rate a country pays. African officials have argued for years that the signal is distorted against them, so that countries pay more than their fundamentals justify and have less left for roads, schools and clinics.

The $75 billion figure comes from Hanan Morsy, deputy executive secretary of the U.N. Economic Commission for Africa, who said persistent risk premiums cost the continent roughly that much each year in excess interest payments, per the U.N. account of the launch. The African Union’s own numbers show the pressure behind it: external debt service has nearly tripled since 2010, and nearly half of its member states sit outside the coverage of the three dominant agencies altogether.

The agencies reject the charge of bias. They say they apply consistent methodologies worldwide. But the complaint has had powerful voices. Akinwumi Adesina, then president of the African Development Bank, argued in 2024 that the big agencies fail to assess African risk accurately and lack independence. Nigeria’s president, Bola Tinubu, called this year for an Africa-owned agency, and then warned that it must earn investors’ confidence through independence, credibility and rigorous work.

A Long Road to Port Louis

The idea is older than the building. African leaders endorsed the project in 2018, and the African Peer Review Mechanism, the A.U.’s governance body, spent years on studies and consultations to prepare it. The timetable slipped repeatedly. A launch planned for June 2025 was not met, and a September 2025 target slipped too before the Oct. 7 date was confirmed.

The design reflects a worry that has dogged the whole enterprise: who owns the judge. The agency was deliberately set up with private governance because of concerns about independence. It will be led by its chief executive, Sifiso Falala. Its technical foundations are supported by Plus94, a South African research and intelligence firm, which the A.U. says is helping its methodology reflect African conditions while meeting international standards. Its first ratings were expected to concentrate on local-currency debt, according to a Berlin think tank.

Speakers at the launch took pains to define success modestly. Mauritius’s financial services minister, Jyoti Jeetun, said the goal was not to win African countries kinder ratings but more accurate ones. Marie-Antoinette Rose-Quatre, the chief executive of the peer review mechanism, said independence had to be the discipline the institution lives by rather than a slogan used at launch.

The Homework Problem

Skeptics are not hard to find, and they are not all outsiders to the project. The most common objection fits in a single phrase. Analysts at the ISS, the Institute for Security Studies, asked whether the agency is simply Africa “marking its own homework,” and why pension fund managers or corporate executives would trust an African rater to judge African governments objectively.

A paper from Germany’s SWP research institute put the same doubt more formally: skeptics question whether the agency can gain credibility with global investors and whether it can resist political pressure. The paper noted that African-based raters already exist, among them Augusto & Co., Bloomfield Investment Corporation and Global Credit Ratings, in which Moody’s recently bought a full stake. It also observed that the Japan Credit Rating Agency and DBRS Morningstar needed many years to win international recognition.

There is a harder objection still, which is about how bond markets work. At a discussion of Africa’s fight with the big agencies, one participant summarized the skeptics’ view this way: “Investors want comparability, not continental solidarity.” A speaker at the same event argued that even a fairer African rating would not change the premium investors demand if global conditions turn unfavorable, because investors lean on the big three for the ability to compare countries on one scale.

Ms. Morsy of the Economic Commission for Africa made a version of the same point from the supportive side. Better ratings alone will not solve Africa’s financing problems, she said, and countries must also strengthen their fundamentals, including sound macroeconomic management, domestic resource mobilization, responsible fiscal policy and reliable data.

“We cannot ask global capital to trust what African capital treats as optional.”
AHUNNA EZIAKONWA, U.N. SPECIAL ADVISER ON AFRICA

Who Has to Believe First

The most pointed challenge at the launch came from inside the room. Ahunna Eziakonwa, the U.N. special adviser on Africa, said African financial institutions, pension funds, development banks and central banks must now show confidence in the new agency by using its ratings. Her formulation was hard to forget, and it set the terms for what comes next.

That may be the real test of the first year. A rating agency has no power of its own. It has a reputation, and a reputation is built by being right, repeatedly, in public, and sometimes by delivering news that its own sponsors do not want to hear. If AfCRA downgrades a government that helped create it, or rates a politically favored borrower below expectations and holds the line under pressure, it will begin to look like an institution. If its opinions drift suspiciously close to what its backers hope for, the global market will notice quickly, and the damage will be hard to reverse.

The case for patience is also real. Fifty-five countries, nearly half of which lack a rating from the big three, represent a gap in information that an agency focused on the continent can fill, particularly for companies, municipalities and local-currency debt, where the global agencies have little presence. More coverage means more data, and more data can mean less guesswork for investors who currently shy away from what they cannot measure.

So the verdict on AfCRA will not come from the speeches in Balaclava, or from the headlines about financial sovereignty. It will come later, from the first ratings it publishes, from whether African pension funds and development banks quietly start to use them, and from whether a fund manager in London or New York ever finds a reason to open the report. For now, Africa has built the agency. What it still has to build is the trust that makes anyone listen.

Burna Boy (Nigeria)

Most Famous Song: “Ye”

Short Bio: Damini Ebunoluwa Ogulu (born 1991), known professionally as Burna Boy, is a Nigerian singer,
songwriter, and record producer. He is one of the most prominent African artists of his generation, recognized for his distinct blend of Afro-fusion, reggae, dancehall, and R&B. He has achieved significant international success, including a Grammy Award.

Seydou Keïta (Mali)

Most Famous Photo: “Untitled” (often referring to his studio portraits from the 1950s, such as Untitled (Woman in
Headwrap with Flowers) or Untitled (Couple, Bamako)).

Short Bio: Born around 1921 in Bamako, Mali, Seydou Keïta is considered one of the most significant African studio
photographers of the 20th century. He opened his successful studio in 1948, capturing the evolving society of Bamako on the cusp of independence. His portraits, characterized by meticulous composition, attention to detail (including props and backdrops), and a dignified portrayal of his subjects, offer a unique visual archive of Malian life.

Read More at the Source