The African Union (AU) is creating its own independent credit rating agency to counter what is seen as unfair ratings given by the so-called big three credit rating agencies including S&P Global Ratings (S&P), Moody’s, and Fitch Group, according to an AU official. “A credit ratings company that is being established to address the specific needs of Africa’s sovereign borrowers is expected to be operational by the end of the year, said Albert Muchanga, the AU’s commissioner for development, trade, tourism, industry, and minerals, speaking to reporters at the AU’s 6th Mid-Year Coordination Meeting of the African Union, which took place on July 18-21 in Accra, Ghana,” according to Sputnik.
“We feel that we’ve not been treated very well when it comes to ratings and the cost of borrowing,” Muchanga was quoted as saying by media on July 21. “We want an institution developed by Africans to contribute to the process of de-risking the African capital market so that in the end we are able to have a situation where we can borrow competitively at home and abroad.”
It was first proposed by African finance ministers in 2021 because the international rating agencies treat African countries unfairly, forcing them to pay higher interest rates compared to other emerging markets and developed countries.
The African Credit Rating Agency (CRA), which could be up and running by the end of the year is being initiated by the African Peer Review Mechanism, African Development Bank, African Export-Import Bank, and the AU Commission.
