Former President Nana Addo Dankwa Akufo-Addo has reignited calls for the establishment of a Pan-African credit rating agency, claiming that existing global credit rating institutions such as Fitch, Moody’s, and S&P continue to undermine African economies through biased and overly punitive assessments. His remarks, made during the recently concluded Afreximbank Annual Meetings in Abuja, have been echoed by several African leaders who believe the current system unfairly restricts access to international capital and development finance.
Akufo-Addo argued that African countries are often subjected to unjustified risk premiums, and their unique economic realities and resilience are rarely reflected in ratings issued by the “Big Three” agencies. “It’s time for Africa to tell its own story with institutions that understand our realities,” he said. “We are being asked to pay more for capital not because of our failures, but because of where we are on the map.”
The renewed push comes in the wake of Fitch Ratings’ recent downgrade of the African Export-Import Bank (Afreximbank), a development finance institution widely seen as a lifeline for African economies during global shocks such as the COVID-19 pandemic. The downgrade, which stemmed partly from Ghana and Zambia’s ongoing commercial debt restructuring, has reignited concerns that African institutions are unfairly penalised by global agencies, even when they demonstrate strong governance, innovation, and regional relevance.
The Case for an African Rating Agency
Proponents of an African-led credit rating agency say the time has come for the continent to assert control over how its economies are assessed. The proposed agency would be designed to better reflect the socio-economic nuances of African countries, including informal sector dominance, climate vulnerabilities, and development financing needs. It would also reduce overreliance on agencies that are often headquartered far from the continent and may lack deep contextual understanding.
Supporters argue such an agency could also offer a more balanced view of African financial institutions like Afreximbank, which despite its critical role in stabilizing economies during crises, faces the same scrutiny as profit-driven commercial banks.
Potential Impact and Challenges
If successful, the new rating agency could:
- Help African countries and institutions negotiate better terms on the international market.
- Empower domestic capital markets through more contextually accurate credit assessments.
- Increase investor confidence by providing alternative, African-anchored credit data.
However, critics warn of significant challenges. Foremost is credibility. Without global recognition, the ratings issued by an African agency may not be accepted by international investors or financial markets, limiting its impact. Countries and companies could be forced to continue relying on existing global agencies, even if they consider them biased.
There’s a risk that without independence, technical rigour, and transparency, a new African agency could be viewed as a political tool rather than a credible rating institution, experts warn.
Is There Bias, or Just Outdated Methodologies?
While many African leaders accuse global rating agencies of bias, others argue the problem may lie in the methodologies. Some experts argue that the criteria were built for developed economies and have not evolved to capture the structural realities of African countries.
Some experts suggest that rather than abandoning global rating systems altogether, there should be a push for reform, including the inclusion of African economists and institutions in the design of rating frameworks. Others propose dual-rating systems, where countries maintain ratings from both African and global agencies, gradually building the legitimacy of the former.
The Road Ahead
The African Union has endorsed the idea of establishing a continental rating agency, and feasibility studies are underway. The challenge will be to ensure it is independent, well-resourced, and technically robust, so it earns the trust of investors, both within and outside Africa.
For now, the conversation continues. As global finance becomes increasingly multipolar, African nations are demanding a voice in the systems that define their financial futures.
