A new credit rating agency designed to address the needs of sovereign borrowers in Africa, and led by an African Union (AU) Commissioner, is on track to be launched in 2025, according to a senior AU official.
Speaking with reporters in Accra, the AU Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, Albert Muchanga, said that the independent agency is currently “at its next phase of operationalization that entails coming up with the final work plan to ensure that we are able to roll it out.” The African Peer Review Mechanism, African Development Bank, African Export-Import Bank, and the AU Commission are all involved in this task, he added. Muchanga also elaborated that the agency will not be part of a regional bloc but will be independent and professional, and emphasized that its establishment was of utmost importance because the African continent has not been treated fairly when it came to ratings and cost of borrowing.
A rating agency essentially assesses the ability of organizations to meet their financial obligations. The official aim of the new agency is to offer a “more tailored” and “fair” credit ratings for African nations to address high borrowing costs and lack of global rating system representation. This will, in turn, reduce risks in the African capital market and help companies become competitive both at home and abroad, the commissioner added. The assessment will provide an independent risk analysis that potential investors can use when deciding whether to invest in assets. The idea for an African credit rating agency was first floated in 2017, following numerous complaints by African governments regarding the conduct of the “big three” international ratings agencies