African Leaders Approve Launch of African Credit Rating Agency at 38th AU Summit
During the sidelines of the 38th AU Summit in Addis Ababa, African leaders made a historic decision to greenlight the African Credit Rating Agency (AfCRA) for launch in June 2025. The agency aims to provide fair and transparent credit ratings that accurately reflect the economic landscape of Africa.
The endorsement of the African credit rating agency by African heads of state represents a significant step towards reshaping how the continent interacts with global capital. However, economists emphasize the importance of establishing credibility among investors in order for the agency to be effective.
Scheduled to be launched in June, AfCRA intends to challenge outdated perceptions of financial risk and enhance Africa’s economic sovereignty. The agency’s primary objective is to create certainty for investors regarding the creditworthiness of African countries.
According to South African economist Nomahlubi Jakuja, the establishment of an African credit rating agency is crucial for instilling confidence in investors. She highlights the need for the agency to build credibility and demonstrate reliability to attract investors who may currently rely on traditional global rating agencies.
For years, global credit agencies like Moody’s, Standard & Poor’s, and Fitch have influenced Africa’s economic outlook with ratings that are often believed to misrepresent the continent’s true economic conditions.
These assessments have led to increased borrowing costs for African nations, impeding their ability to finance crucial infrastructure and development projects. Biased media coverage in Africa has been cited as a contributing factor, resulting in substantial extra debt servicing costs for countries like Nigeria, Kenya, Egypt, and South Africa.
The creation of AfCRA is expected to address these challenges by providing a more accurate and context-specific assessment of African economies, thereby reducing the financial burden on African nations and promoting sustainable development.
Furthermore, the establishment of other alternative credit rating agencies, such as the Africa Credit Ratings Initiative launched by UNDP Africa in collaboration with AfriCatalyst in 2024, underscores the growing demand for locally-driven credit rating agencies that take into account country-specific data and circumstances.
The AU has outlined a roadmap for the establishment of AfCRA, which includes establishing a governance structure, ensuring operational independence, and building credibility with investors and international financial institutions.
By creating a platform for more accurate and tailored credit assessments, AfCRA and similar initiatives aim to unlock growth opportunities and improve financial terms for African nations, ultimately fostering sustainable development across the continent.
Credit: Boniface Orucho, Bird Story Agency
