The United Nations (UN) and the African Union (AU) are preparing the launch of the African Credit Rating Agency (AfCRA) to correct the underestimation of the continent by the three major global credit rating agencies that dominate access to international financial markets.
Complaints have been growing in recent years and have been reported by Diário Económico (diarioeconomico.co.mz), with several African leaders criticising the global rating agencies—the financial firms that assess sovereign and corporate debt markets worldwide.
In January, the African Export-Import Bank (Afreximbank), the continent’s largest trade finance institution, cut ties with Fitch, arguing that the agency “does not understand” the bank’s operating model or mandate.
More recently, officials from the United Nations Economic Commission for Africa (UNECA) and the African Union (AU) argued that the three main agencies—Moody’s, Standard & Poor’s and Fitch—do not properly account for domestic market conditions, are disconnected from current economic developments, and ultimately harm African companies. In the first quarter of this year, criticism intensified through a joint report.
“Global credit rating agencies remain excessively cautious in their assessments of African countries, often producing ratings that do not reflect real-time economic progress,” reads the 12th report by UNECA and the African Peer Review Mechanism (APRM). Written by three officials from each institution but not binding on UNECA or APRM, the document is strongly critical of the agencies’ practices.
The report calls for methodological changes, greater engagement, and a revised analytical perspective when assessing African countries.
More frequent updates and fewer constraints
Regarding the frequency of rating updates, UNECA and APRM experts question whether agencies fully capture ongoing structural changes in the region or instead reinforce outdated perceptions that prevent fair assessments of a country’s ability to meet its debt obligations.
Criticism also focuses on the difficulty for companies to achieve a higher rating than their sovereign state—described as an “unfair limitation.” Analysts note that many high-performing African banks and companies are constrained by this ceiling, not due to their fundamentals, but because they operate in regions perceived as high risk.
They cite South Africa as an example, where local banks only received upgrades after the country’s sovereign rating improved.
Support for the African Credit Rating Agency (AfCRA)
This situation, they argue, highlights the importance of the African Credit Rating Agency (AfCRA). By providing a clearer picture of institutional quality, governance, and financial performance in an African context, it could help build a more balanced financial architecture, unlock the continent’s economic potential, and enable fairer access to capital markets.
AfCRA is an African Union initiative expected to become operational this year, with headquarters in Mauritius.
The report also argues that the downgrade of Afreximbank in June 2025 reflects “structural limitations in traditional methodologies,” particularly their inadequate treatment of development finance institutions and limited understanding of policy-driven mandates.
Recommendations for reform
UNECA and APRM analysts recommend strengthening capacity and engagement to ensure more accurate and timely assessments, expanding evaluation frameworks to better support domestic market development, and adapting global rating methodologies to local realities.
The report analyses African sovereign ratings in 2025 and considers how perceptions of debt issuers may evolve in 2026.
S&P remains optimistic on Africa
At the same time, Standard & Poor’s (S&P) reported that African sovereign ratings are at their highest level since the pandemic, supported by reforms and economic growth across much of the continent, including several Lusophone countries.
“The average rating of African countries has reached its highest level since the end of 2020, reflecting recent reforms and improved growth, although the full impact on credit metrics will take time to materialise,” the agency said in its report titled “Stabilising Positive Momentum on the Outlook for 2026.”
Analyst Benjamin Young noted that stable growth, lower inflation, improved commodity price prospects (excluding oil), and a weaker dollar should reduce financing costs and support continued reforms.
However, he warned that structurally high debt levels and weak, concentrated revenue bases remain key risks. With external debt repayments by governments expected to exceed USD 90 billion this year, external vulnerabilities are also increasing.
Persistent fiscal deficits have significantly contributed to credit deterioration over the past two decades, increasing borrowing needs at often high costs, the report adds.
S&P ratings range from A to C, where AAA is the safest level and CCC indicates extreme risk—below that (CC, C and D) signals near-default or default conditions.
Three Lusophone countries are rated below investment grade: Cape Verde (B), Angola (B-), and Mozambique (CCC+). Among 27 countries analysed by S&P, only four hold investment-grade ratings: Morocco, Botswana, Mauritius, and Saint Helena.
Text: Editorial Team • Photo: D.R.
