African Union launches homegrown credit rating agency to challenge Moody’s, S&P and Fitch

The African Union will launch Africa’s first homegrown credit rating agency on Wednesday, seeking to provide an alternative to the global agencies that dominate the continent’s credit ratings market as high debt burdens continue to weigh on African economies.

• The African Union is set to launch Africa’s first homegrown credit rating agency, Africa Credit Rating Agency (AfCRA).
• The AU has long criticised existing international rating agencies for their allegedly unfairly negative assessments of African economies.
• A 2023 UN study estimated that subjective biases in credit ratings may have cost African countries up to $74.5 billion in higher borrowing costs and missed financial opportunities.
• AfCRA aims to rate sovereign borrowers, financial institutions, and private companies using regional data and expertise to give investors more accurate assessments tied to African realities.

The Africa Credit Rating Agency (AfCRA) will be launched in Port Louis, Mauritius, where it will be headquartered. The project has been nearly a decade in the making, with the African Union pushing since 2017 to establish a homegrown alternative to the major international rating agencies.

Credit ratings play an important role in how investors assess risk and allocate capital. The African market is dominated by Moody’s, S&P Global Ratings and Fitch Ratings, which together control an estimated 95% of the global credit ratings business.

The African Union and some member states have criticised the agencies for what they describe as overly negative assessments of African economies, including concerns that countries can be downgraded quickly during periods of stress but are slower to receive upgrades.

Debate over fairness

The agencies have rejected claims of systemic bias, saying they apply the same methodologies globally.

A 2023 United Nations Development Programme study estimated that subjective elements in sovereign credit ratings may have cost African countries as much as $74.5 billion through higher borrowing costs and missed financing opportunities.

AfCRA will rate sovereign borrowers, financial institutions and private companies. The AU says it will operate independently and be funded through shareholder capital and its own operations.

The agency is expected to provide investors with assessments based on African data, expertise and economic realities while helping countries improve access to capital markets.

The initiative comes as Africa faces rising debt-service costs. The AU said the continent’s annual external debt service rose to $163 billion in 2024 from $61 billion in 2010, with interest payments in some countries exceeding annual spending on health and education.

AfCRA will also seek to expand credit rating coverage across the continent. Only 32 of Africa’s 55 countries currently have ratings from the three major global agencies, leaving 23 without coverage.

The new agency aims to help more African issuers access capital markets by providing credit assessments, while also retaining the option to rate non-African entities subject to management approval.