PORT LOUIS, Mauritius — The African Union is launching the continent’s first credit rating agency on Wednesday, seeking to offer an alternative to the “big three” global ratings firms as debt burdens weigh on many African economies, Reuters reported.
The Africa Credit Rating Agency, or AfCRA, will be based in Port Louis and will rate sovereign borrowers, financial institutions and private companies. “AfCRA complements existing global credit rating agencies by offering a perspective rooted in African data, expertise and realities,” the African Union said in a statement. The AU said the agency will operate independently and be funded through shareholder capital and its own operations, but did not name the shareholders.
African leaders have long accused Western agencies of failing to fairly assess the risk of lending to African countries and of downgrading them too quickly during crises such as conflicts and pandemics, Reuters said. The AU says 23 economies on the continent lack a rating from the three big agencies, and that the new body should improve access to capital markets and give investors more context-specific assessments. It will also rate non-African entities where appropriate.
The project has been nearly a decade in the making. The AU Assembly endorsed it in 2018, finance ministers backed it in a 2023 declaration in Nairobi, and its governance and methodology were developed under the African Peer Review Mechanism, according to the AU. The launch coincides with the 2nd Annual African Conference on Credit Ratings in Mauritius.
Sources: Reuters, African Union
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