Kenya has taken a swipe at global credit rating agencies for bias, linking them to $75 billion in lost opportunities to African countries.
- Last month, The African Union faulted Moody’s latest revision of Kenya’s outlook from negative to positive, arguing that the change is an admission that the July 2024 downgrade was premature and incorrect.
- In 2023, Moody’s inaccurately downgraded Nigeria from ‘B3’ to ‘Caa1’ citing that the government’s fiscal and debt position was expected to deteriorate further under the new administration.
- The criticism has bolstered efforts to establish a continental credit rating agency as an alternative.
“We must be bold and call this for what it is: A financial straitjacket imposed on Africa. A system that punishes our economies while rewarding others, even when the fundamentals are comparable if not better. The foundations of global finance are supposed to be anchored on the principles of fairness, transparency, and merit. Yet, these principles are disregarded when it comes to Africa,” President William Ruto said in Addis Ababa, Ethiopia.
Negative ratings raise the cost of borrowing, as downgraded economies find it harder to access financing from international markets. The African Credit Rating Agency (AfCRA) is set to officially launch in June 2025 as part of the African Union’s broader agenda for financial integration and independence.
“An African Credit Rating Agency is not just an alternative, it is an imperative. This agency must be globally credible and backed by rigorous, credible data and driven by high reporting standards from our own governments. But more importantly, it must reflect Africa’s reality correctly,” he added.
AFCRA will focus exclusively on African economies. Although it is designed to even the playing field for the continent, the AU has said that it will “compete with or replace the three international credit rating agencies, but rather [] complement them by providing an alternative perspective.”
