The African Union (AU) has officially launched the African Credit Rating Agency (AfCRA), a move aimed at addressing concerns over unfair treatment by dominant global rating firms.
Kenyan President William Ruto introduced the agency at an AU gathering in Addis Ababa, Ethiopia, on Friday.
“Global credit rating agencies have not only dealt us a bad hand, they have also deliberately failed Africa,” Ruto stated during the launch.
“They rely on flawed models, outdated assumptions, and systemic bias, painting an unfair picture of our economies and leading to distorted ratings, exaggerated risks, and unjustifiably high borrowing costs.”
A study conducted by the Africa Peer Review Mechanism in partnership with the United Nations Development Programme estimates that these biased ratings have cost African nations around $75 billion in lost opportunities.
Potential Impact of AfCRA
According to Ruto, even a slight improvement in how African countries are rated could unlock an estimated $15.5 billion in additional financing. This extra capital could reduce reliance on foreign aid or be redirected toward infrastructure projects across the continent.
Despite Africa’s vast economic potential and abundant natural resources, only two African nations currently hold an investment-grade credit rating. “It is time for Africa to use the right scale, one that reflects its true weight,” Ruto added.
For years, the AU has pushed back against how global rating agencies assess African economies. In January, the organization criticized Moody’s Ratings for its inconsistent evaluation of Kenya’s financial standing.
“As the continent continues its march towards economic integration and resilience, the establishment of the African Credit Rating Agency (AfCRA) represents a pivotal step in asserting Africa’s position on global financial governance,” Ethiopia’s ENA news agency reported.
AfCRA is expected to offer fair, transparent, and development-oriented credit ratings that present a more accurate representation of African economies.
Years in the Making
The idea of an African-led credit rating system has been under discussion for years. In September 2023, the AU formally announced plans to bring the project to life.
This decision follows growing dissatisfaction with the world’s leading rating agencies—Moody’s, Fitch, and S&P—which have long been accused of applying unfairly harsh assessments to African economies. Critics argue that these ratings lead to higher borrowing costs and, in some cases, make it more difficult for African nations to access global financial markets.
The push for an independent rating agency gained momentum in 2022 when Macky Sall, then chair of the AU and president of Senegal, called for an overhaul of the system to end what he described as financial injustices against African nations.
With AfCRA now established, African leaders hope to reshape how the continent’s economies are evaluated, allowing nations to secure financing on more equitable terms.
