Africa will launch its first continental credit rating agency on October 6 in Mauritius as the continent strengthens its financial architecture and provides credit assessments that better reflect African market realities. The African Credit Rating Agency (AfCRA) will operate as an independent, private-sector-led institution offering sovereign and corporate credit ratings. The agency is expected to complement existing global rating firms while expanding coverage of African companies, municipalities, and local-currency debt markets. ALSO READ: African credit rating agency could correct global bias, experts say Misheck Mutize, the Lead Expert at the African Peer Review Mechanism (APRM), an African Union institution that helps member states assess and improve governance and economic management, said preparations for the launch had progressed faster than anticipated following discussions during this week's African Union Specialised Technical Committee meeting. “It means a new dimension has come. We are seeing more confidence in Africa because the investors backing this initiative are from the private sector,” he told CNBC Africa in an interview, revealing that October is the launch date. He said the agency would have no government shareholding, a structure intended to safeguard its independence and strengthen investor confidence. ALSO READ: Rwanda credit rating maintained at B with stable outlook, driven by strong, resilient growth The launch is the latest step in an initiative that African leaders have pursued since 2017 to establish a home-grown credit rating agency in an industry currently dominated by Moody's, S&P Global and Fitch Ratings. African governments and regional institutions have long argued that international rating agencies often assign higher risk to African economies than warranted, resulting in increased borrowing costs and reduced access to international capital markets. Moody's and S&P Global have consistently rejected claims of bias, maintaining that their rating methodologies are applied consistently across countries. A 2023 study by the United Nations Development Programme estimated that subjective elements in sovereign credit ratings may have cost African countries up to $74.5 billion in additional borrowing costs and missed financing opportunities. ALSO READ: Rwanda’s credit outlook turns stable, signals investor confidence AfCRA intends to broaden credit coverage beyond sovereign issuers by assessing African companies, municipalities and local-currency debt markets, segments that remain largely unrated across much of the continent. Earlier this week, S&P Global agreed to acquire a majority stake in Agusto & Co., one of Africa's leading credit rating agencies with operations in Nigeria, Kenya, Rwanda and Ghana. Moody's has also strengthened its presence on the continent through acquisitions including GCR Ratings, West Africa Rating Agency (WARA) and Egypt's Middle East Ratings and Investors Service (MERIS). Mutize said the growing interest from international firms reinforces Africa's longstanding argument that local expertise is essential to assessing the continent's economies. “We seem to be vindicated that we were raising legitimate concerns, African institutions have supported their position with empirical research. AfCRA is not intended to provide more favourable ratings but to produce assessments grounded in a deeper understanding of African political, economic and institutional conditions,” he said. “The objective is not to inflate ratings, it is to ensure ratings are informed by a deeper understanding of domestic political, economic and institutional realities.” Credit ratings play a key role in determining governments' access to international capital markets, influencing Eurobond pricing, borrowing costs and investor confidence.
