From Foreign Policy · Dan M. Ford, Georgia Leanh Webb · · 3m
Africa Credit Rating Agency Launch
African Union launches new credit agency to challenge Western rating dominance.
In brief
African Union launches new credit agency to challenge Western rating dominance. The African Union launched its Africa Credit Rating Agency (AfCRA) to address high borrowing costs for African nations by reducing reliance on Western credit rating agencies. Originally reported by Foreign Policy.
African Union launches new credit rating agency
The African Union launched its Africa Credit Rating Agency (AfCRA) on October 7, 2026, to challenge the big three Western credit rating agencies.
Current credit rating landscape overemphasizes risk
African countries have long complained that Western credit rating agencies overemphasize risk, leading to excessively expensive borrowing costs for African states and institutions.
Big three agencies dominate global credit ratings
The big three credit rating agencies, Moody's, Standard & Poor's (S&P), and Fitch, determine ratings for 95 percent of the world’s rated debt.
Historical context of credit ratings in Africa
The big three began rating African sovereigns in 1994, with South Africa receiving the continent’s first credit rating. In 2003, the UNDP partnered with S&P to rate 13 African countries.
Limited investment grade ratings in Africa
Only Botswana, Mauritius, and Morocco are currently listed as 'investment grade' by the big three; all other African countries receive 'junk grade' ratings.
Costly impact of poor ratings
A UNDP report states that external credit ratings have led to a $75 billion annual loss for Africa through inaccessible lending policies and disproportionate interest payments.
High downgrade rates in Africa
In 2024, Africa accounted for nearly half of all global sovereign credit downgrades, with 56 percent of rated African nations downgraded during the height of the COVID-19 pandemic.
African entities end contracts with big three
The African Export-Import Bank terminated its contract with Fisch following a continuous stream of downgrades, and Dangote ended its contract with Fisch after a 2024 downgrade.
Big three dispute African risk assessment
The big three agencies argue that they base their analysis of economic risk in Africa on the same factors they use elsewhere, claiming low ratings reflect poor economic, political, and institutional health.
AfCRA aims to differentiate itself
The Africa Credit Rating Agency plans to rely more heavily on local data and financial indicators than the big three, with a stronger African-based network of analysts.
AfCRA focuses on local-currency debt
The AfCRA aims to concentrate more on rating local-currency debt rather than purely dollar-denominated debt to unlock cross-African funding and avoid foreign exchange risk.
Big three expand presence in Africa
S&P opened an office in Abuja, Nigeria, and acquired Agusto & Co, while Moody’s acquired GCR Ratings to deepen their presence in Africa.
AfCRA rejects issuer-pays model
The AfCRA will rate all sovereign entities and private actors without requiring an issuer-pays agreement, unlike the big three which often use this model for smaller countries.
Skepticism about AfCRA's impact
Many economists believe the AfCRA’s impact will be limited because financial institutions need global comparisons of borrowers across regions, not just African entities.
Success depends on investor trust
The success of the AfCRA ultimately depends on investors seeing its ratings as reliable, as the continent will benefit to the extent they trust the agency’s analysis.
The one thing
The African Union launched its Africa Credit Rating Agency (AfCRA) to address high borrowing costs for African nations by reducing reliance on Western credit rating agencies.
