The African Union (AU) has officially launched the African Credit Rating Agency (AfCRA), seeking to reshape how investors assess African economies and address concerns that prevailing international credit assessments contribute to higher borrowing costs across the continent.
The agency, approved by the AU in 2017 and operationalised through the African Peer Review Mechanism (APRM), was formally unveiled on Wednesday as African policymakers intensified calls for greater control over the continent’s financial narrative.
The launch places AfCRA alongside the global credit-rating industry dominated by Fitch Ratings, Moody’s Ratings and S&P Global Ratings, although its proponents insist the new institution is intended to complement rather than simply compete with existing agencies.
Central to the initiative is the argument that African economies are often assessed without sufficient consideration of their specific economic, institutional and development contexts, contributing to an “Africa premium” in the cost of capital.
President Yoweri Museveni of Uganda, chairperson of the APR Committee of Focal Points, represented at the launch by Amos Lugoloobi, Uganda’s Minister of State for Finance, Planning and Economic Development, said Africa did not lack economic potential but continued to face structural constraints, including inadequate resource mobilisation and underdeveloped human capital.
He said access to adequate and affordable capital remained critical to the continent’s development, arguing that African countries continue to face high borrowing costs from international markets.
According to him, the assessments of global rating agencies influence those costs, making accurate evaluation of African economies particularly important.
Museveni stressed that Africa should not seek to avoid scrutiny but should ensure that the risks and opportunities associated with its economies are assessed accurately and within their appropriate context.
Mahmoud Ali Youssouf, chairperson of the African Union Commission, said AfCRA was established to objectively assess risks facing African economies while maintaining the independence necessary to protect its credibility.
Marie-Antoinette Rose Quatre, CEO of APRM, said the agency had emerged from concerns over a perception of Africa that does not adequately reflect the size and underlying potential of its economies.
“Africa could no longer postpone the institutions required to tell its own economic story with rigour and credibility,” she said.
Quatre stressed that AfCRA was not established merely to compete with international rating agencies but to provide assessments that are independently produced, materially unbiased and grounded in what she described as Africa’s “true measure.”
Addressing Africa’s financing gap
The agency enters a market where a major proportion of African financial instruments remain unrated, limiting the information available to investors and potentially increasing the cost of accessing capital.
According to APRM, Africa’s capital market is valued at about $4 trillion, while instruments representing less than five percent of that value carry a credit rating.
AfCRA is expected to cover sovereign, sub-sovereign and corporate issuers, potentially extending formal credit assessments to segments of the African market that currently lack ratings.
The agency is also expected to focus primarily on ratings for local-currency debt instruments, an area that could become increasingly significant as African governments and companies seek to deepen domestic capital markets and reduce exposure to foreign-currency borrowing risks.
Its proponents argue that a stronger domestic rating ecosystem could improve the information available to investors while supporting the development of local debt markets.
However, the agency’s credibility will depend heavily on its ability to demonstrate independence from governments and political interests.
Although AfCRA emerged from an AU decision, it will not be owned by African governments, a structure intended to provide greater institutional independence and strengthen confidence among investors.
The debate extends beyond sovereign debt to African companies and financial institutions operating across multiple countries.
Denys Denya, senior executive vice president, Finance, Administration and Banking Services at Afreximbank, who represented George Elombi, president and chairman of the bank, questioned whether companies with operations spanning several African markets should be constrained by the sovereign ratings of their home countries.
“Why should Dangote Group, which is rapidly expanding its footprint across Africa, be confined by Nigeria’s credit ratings?” he asked.
He similarly questioned why major banks in South Africa, Egypt, Morocco and other African markets with cross-border operations should be limited by national ratings.
Denya said AfCRA should establish a new benchmark for assessing African risk while maintaining its independence and African ownership.
The AfCRA launch also follows renewed calls from African leaders, including Nigerian President Bola Tinubu, for an Africa-owned credit-rating institution.
Tinubu has argued that African economies face excessive borrowing costs partly because international assessments do not always capture their economic realities.
In an opinion article published in the Financial Times, the Nigerian president highlighted what he described as the “Africa premium”—the difference between perceived and actual risk that can raise the cost of capital for African economies.
The president argued that African access to international capital markets remains heavily influenced by the assessments of Fitch, Moody’s and S&P Global, whose ratings shape investor sentiment but may not fully account for local economic conditions.
The launch of AfCRA is considered an attempt to create an additional source of credit information for investors rather than eliminate the role of established global agencies.
Fitch has defended its methodology, maintaining that its ratings are based on globally consistent and transparent criteria.
The launch, attended by AU representatives including APRM and the government of Mauritius, marks the beginning of that effort: creating an African institution capable of assessing African risk while meeting the standards expected by global capital markets.
