Africa has launched a credit rating agency that will develop its own approach to assessing the continent’s governments and companies, adding an African-led source of credit analysis to a market dominated by international providers.
The Africa Credit Rating Agency, known as AfCRA, was officially launched in Port Louis, Mauritius, on Oct. 7 as part of an African Union (AU) effort to strengthen the continent’s financial institutions and expand its role in assessing African credit risk.
The agency will provide ratings and analysis that draw heavily on African data, expertise, and institutional structures, according to statements from the AU and the African Export-Import Bank, one of the institutions supporting its establishment.
AfCRA is intended to complement, not replace, existing international and regional rating agencies. Its backers say its success will depend on the independence of its assessments, the quality of its data, and the transparency of its methodology, rather than on whether it assigns African borrowers more favorable ratings.
“The rating methodology AfCRA develops must recognize the uniqueness of our environment and its institutional structures,” Afreximbank Senior Executive Vice President Denys Denya said at the launch. “The Agency must set its own standards and not follow those set elsewhere.”
Denya said AfCRA should remain independent and African-owned and controlled, while providing assessments that identify both strengths markets overlook and weaknesses that still need addressing.
Closing the Ratings Gap
The agency is entering a market where many African issuers remain unrated, and rating coverage of local-currency and sub-sovereign debt remains limited, according to Afreximbank. Expanding that coverage could give investors more information while supporting the development of domestic and regional capital markets.
The AU has framed the agency as part of a broader effort to strengthen Africa’s financial architecture and increase the continent’s capacity to shape assessments of its economies.
AU Commission Chairperson Mahmoud Ali Youssouf said AfCRA would provide African and international investors with independent and technically rigorous analysis that incorporates greater access to African data and economic context.
Credit ratings can affect both access to capital and the price governments and companies pay to borrow. African officials have argued that assessments that do not sufficiently account for local data, institutions and economic conditions can contribute to perceptions of higher risk.
AfCRA is not intended to shield borrowers from scrutiny or guarantee favorable ratings, Youssouf said. African governments must also continue strengthening fiscal management, transparency and debt sustainability.
That distinction is central to how AfCRA’s backers are positioning the new institution. Rather than seeking easier assessments, they say the agency should provide another source of credit opinion based on a fuller understanding of African economies and institutions.
The African Peer Review Mechanism (APRM) helped develop AfCRA after the AU endorsed its establishment in 2017. The APRM worked on its technical and institutional framework and governance arrangements designed to safeguard its analytical and operational independence.
APRM Chief Executive Officer Marie-Antoinette Rose Quatre said credibility would be the agency’s greatest asset and called on governments to provide accurate, timely information, while encouraging investors, financial institutions, and the media to scrutinize its work.
Afreximbank said that AfCRA could also strengthen competition and analytical capacity in African credit markets. The bank has argued that African multilateral financial institutions should be assessed based on their fundamentals, legal frameworks, mandates, performance, and operating models.
Mauritius will host AfCRA, with the AU citing the country’s regulatory framework, established international financial center and connections with African and global markets.
Mauritian Financial Services and Economic Planning Minister Jyoti Jeetun said the agency could help deepen capital markets and mobilize investment for infrastructure, renewable energy, telecommunications, health care and agribusiness.
