AU launches continent’s first credit rating agency
The Africa Credit Rating Agency will help investors to assess Africa’s investment risk better.
The African Union (AU) launched its first credit rating agency, AfCRA, on Wednesday, aiming to offer an alternative to the global "big three" ratings agencies amid rising debt burdens on African economies. AfCRA, endorsed by African leaders in 2018, will be based in Mauritius's capital, Port Louis. Afreximbank executive vice president Denys Denya noted that the new agency will offer investors more information and context to assess Africa's investment risk better.
He criticized Western ratings agencies for their lack of fairness in assessing African countries' risk, particularly during crises like conflicts and pandemics. However, the agencies defend their methods, asserting a global uniformity in their practices. The success of AfCRA will depend on establishing credibility, especially during market stress, according to finance lecturer Dennis Shen.
Former Nigerian Vice President Yemi Osinbajo emphasized the need for AfCRA to meet global standards and avoid chauvinistic or nationalist tendencies. With African economies currently rated B to B-minus on average, the AU hopes AfCRA will reduce borrowing costs and improve access to capital markets by providing balanced, context-specific assessments of African economies.
Written by urgent.news from SABC News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
