The African Union (AU) on Wednesday launched the Africa Credit Rating Agency (AfCRA), seeking to provide an alternative to the global “big three” amid rising debt burdens and borrowing costs across the continent.
AfCRA, whose creation was endorsed by African leaders in 2018, is being launched in Port Louis, the capital of Mauritius, where it will be headquartered. According to the AU, the new agency would complement existing global players by providing assessments based on African data, expertise and economic realities.
“AfCRA complements existing global credit rating agencies by offering a perspective rooted in African data, expertise and realities,” the AU said in a statement.
African leaders have for years criticised S&P, Moody’s and Fitch, accusing them of failing to adequately reflect the economic realities of African countries and of downgrading sovereigns too quickly during crises such as conflicts and pandemics.
The agencies have rejected the criticism, maintaining that they apply the same methodologies globally.
Former Nigerian Vice President Yemi Osinbajo told Reuters that AfCRA could provide a counterweight to established players but must operate in line with global standards.“It can’t just be a chauvinistic or nationalistic agency,” he said.
The AU said AfCRA will assess sovereign borrowers, financial institutions and private companies and operate independently, with funding from shareholder capital and its operations, according to the AU.
AfCRA is also expected to improve African countries’ access to capital markets while providing investors with more balanced and context-specific assessments of economies across the continent.
The AU said African economies are currently rated B to B-minus on average, compared with BB for other emerging regions, a gap it said could limit participation by some investors and increase borrowing costs.
The push to improve borrowing conditions has become more urgent following years of increased government borrowing, which has pushed some African countries into debt distress.
“The stakes are significant,” the AU said, noting that the continent’s annual external debt service rose to $163 billion in 2024 from $61 billion in 2010.
It added that in many countries, interest payments have exceeded annual budgets for key social sectors, including health and education.
AfCRA is also expected to expand coverage across the continent, with 23 African economies currently lacking assessments from the three major global players.
