A high-level African Union-backed panel has strongly disputed Fitch Ratings’ decision to downgrade the African Export-Import Bank (Afreximbank), accusing the agency of misjudging the bank’s risk profile and misclassifying sovereign loans.
The African Peer Review Mechanism (APRM), a governance monitoring body of the AU, called out Fitch for what it described as a flawed assessment of Afreximbank’s exposure to Ghana, South Sudan, and Malawi. According to the APRM, Fitch wrongly labeled the bank’s sovereign loans to these countries as non-performing, despite Afreximbank’s treaty-based protections and its unique shareholder structure.
Earlier this week, Fitch slashed Afreximbank’s credit rating to BBB-, bringing it just one notch above speculative grade. The agency cited the increasing likelihood that the bank could be impacted by ongoing sovereign debt restructurings in Africa, a development that could reduce the pool of institutional investors eligible to hold its bonds.
But the AU panel rejected that basis, arguing that Fitch’s approach ignored Afreximbank’s founding treaty, which grants the institution legal immunities and a level of financial protection from such restructuring processes.
“Fitch’s unilateral treatment of these sovereign exposures, as comparable to market-based commercial loans, despite their backing by treaty obligations and shareholder equity stakes, is flawed,” the APRM said. “Doing so reflects a misunderstanding of the governance architecture of African financial institutions and the nature of intra-African development finance.”
In response, Fitch defended its actions, stating that its rating decisions for all supranational entities follow “globally consistent, transparent, and publicly available criteria.” The agency said it stands by the independence and robustness of its analytical framework.
Afreximbank is currently entangled in several contentious debt restructurings. In Ghana’s case, the government has refused to recognize the bank’s preferred creditor status and is moving ahead with plans to restructure over $768 million in debt. Zambia is following a similar path with $45 million in liabilities. Meanwhile, Afreximbank recently secured a court judgment declaring South Sudan in default on $657 million worth of obligations.
This isn’t the first time the APRM has clashed with international credit rating agencies. The panel previously challenged Moody’s downgrade of Ghana in 2022 and has long criticized what it views as disproportionately negative assessments of African economies. Many African finance officials and economists argue that such ratings overstate risk and inflate the cost of borrowing for the continent.
As pressure builds for reform in the global credit ratings industry, the Afreximbank case may become a key flashpoint in the ongoing debate over how African institutions are assessed by global financial gatekeepers.
