African leaders have endorsed the establishment of an African Credit Rating Agency (AfCRA), which aims to challenge long-standing risk perceptions and strengthen Africa’s economic sovereignty a move set to reshape how the continent is assessed by global investors.
AfCRA is due to launch in June 2025.
Economists, however, stress that AfCRA must establish credibility among investors to be effective. South African economist Nomahlubi Jakuja explains that the agency is designed to assure investors of Africa’s creditworthiness but must build trust to compete with established global rating firms.
For decades, credit agencies such as Moody’s, Standard & Poor’s, and Fitch have determined Africa’s economic outlook. However, many argue their ratings misrepresent the continent’s true economic strength, inflating borrowing costs and limiting access to development finance.
A 2024 report by Africa No Filter and Africa Practice found that negative media coverage costs countries like Nigeria, Kenya, Egypt, and South Africa an estimated $4.2 billion annually in additional debt servicing. This money, researchers argue, could instead fund education, healthcare, and clean water for millions.
Similarly, a 2023 study by the Regional Bureau for Africa found that risk misperceptions have cost the continent over $24 billion in excess interest and $46 billion in lost lending. Frequent sovereign downgrades have made it difficult for African nations to secure financing.
Moody’s January 2025 updates continue to rank many African nations at “Caa1,” indicating high credit risks. While some, like Kenya, have seen a positive outlook, the overall ratings still restrict access to affordable capital.
AfCRA aims to provide a more balanced, Africa-specific approach to credit ratings. Experts like Kenneth Ekesa from the African Economic and Social Research Institute argue that global agencies overlook key factors, such as Africa’s economic resilience, informal sector contributions, and intra-African trade.
By incorporating local financial realities, AfCRA hopes to offer fairer assessments and unlock better financing terms. The African Union has outlined plans to ensure its independence and credibility, with estimates suggesting Africa could save up to $75 billion in excess payments if ratings were more objective.
The move signals a growing push for financial independence, with alternative credit rating initiatives gaining traction across the continent.
