African Union launches Africa Credit Rating Agency to complement global raters

The African Union (AU) is launching a continental credit rating agency. It is called the Africa Credit Rating Agency (AfCRA). France 24, RT and AllAfrica all reported the launch.

In a statement, the AU said: "AfCRA complements existing global credit rating agencies by offering a perspective rooted in African data, expertise and realities", according to AllAfrica.

What is reported

According to AllAfrica, AfCRA is the continent's first credit rating agency. AllAfrica reported that the AU is launching it on Wednesday. The reports do not give the exact date. AllAfrica also reported that:

• AfCRA will be based in Port Louis, Mauritius.
• The launch comes eight years after the AU first endorsed the agency's creation.
• According to the AU, AfCRA will rate sovereign borrowers, financial institutions and private companies. It will also rate non-African entities where appropriate.
• According to the AU, the agency will operate independently. It will be funded through shareholder capital and its own operations.

According to AllAfrica, the AU said Africa's annual external debt service rose to €145.5 billion in 2024, from €54.48 billion in 2010. AllAfrica attributes these euro-denominated figures to the AU. According to the AU, 23 economies on the continent have no rating from the three major agencies. The reports do not identify them.

AllAfrica reported that in many African countries, interest payments have exceeded annual budgets for health and education. It also reported that years of increased borrowing have pushed some countries into debt distress. "The stakes are significant," the AU said, according to AllAfrica.

AllAfrica's account cites unnamed newswires. The France 24 item is a video bulletin with a one-line text summary. The RT item consists of a headline and short summary only.

What is disputed

Whether the major agencies rate African borrowers fairly is contested. AllAfrica reported that a 2024 Reuters investigation into Africa's debt crisis found no evidence of systemic bias in the sovereign ratings assigned by the three major agencies.

What each side says

• African Union: AfCRA should improve access to capital markets and give investors more balanced, context-specific assessments. "AfCRA aims to reduce such burdens by improving investor confidence and market transparency," the AU said, according to AllAfrica.
• Unnamed African leaders and finance experts: According to AllAfrica, they say S&P Global Ratings, Moody's Ratings and Fitch Ratings have not assessed African lending risk fairly. They also say the agencies downgraded African countries too quickly during conflicts and pandemics.
• S&P, Moody's and Fitch: According to AllAfrica, they reject this criticism and say they apply the same methodologies globally. The reports do not include their response to the launch itself.
• RT's headline describes the agency as launched "to challenge Western dominance". The reports reviewed by Vocemundi do not attribute this framing to the AU.

What is not known

The reports do not name AfCRA's shareholders, leadership or initial capital. They do not say when it will issue its first ratings or describe its methodology. They do not say whether it has regulatory recognition or whether investors or lenders will use its ratings.

Analysis

AfCRA's impact is likely to depend on details the reports do not include: its methodology, its shareholders and capital, and its regulatory recognition. The AU says it will be funded through shareholder capital and its operations. If investors and lenders come to use its ratings, it could add a further view for the 23 economies without major-agency ratings, as the AU intends. If they do not, its influence on borrowing costs may be limited. The debate over fairness also remains open. African critics allege bias, the agencies reject this, and a 2024 Reuters investigation cited by AllAfrica found no evidence of systemic bias. AfCRA's first ratings may offer a basis for comparison.

Produced by the Vocemundi newsroom with AI assistance.