A whopping $75 billion—that’s how much African nations have lost due to subjective risk assessments by global credit rating agencies, according to the United Nations.
Despite the existence of multiple rating agencies worldwide, investors and lenders overwhelmingly rely on the evaluations of the Big Three: Moody’s, Fitch, and S&P Global. Their dominance is rooted in deep market integration, long-established methodologies, and overall influence on global financial stability.
However, African leaders have long argued that these agencies unfairly assess their economies, eroding investor confidence and increasing borrowing cost. Kenyan President William Ruto, a vocal critic, recently accused these rating companies of relying on “outdated and flawed assumptions” that result in “distorted ratings” and “exaggerated risks.”
In response to these perceived injustices, the Africa Credit Rating Agency (AfCRA) was born—the continent’s first-ever credit rating agency designed to provide fairer, more context-specific evaluations of African economies.
Here’s everything you need to know about the rating agency, from what it aims to achieve to the challenges standing in its way.
What is Africa Credit Rating Agency?
The Africa Credit Rating Agency (AfCRA) is an initiative by the African Union (AU) aimed at providing independent, credible, and development-driven credit ratings for African economies.
Its main goal is to increase transparency in risk assessments while reducing the continent’s reliance on major international rating agencies.
African leaders argue that AfCRA will offer a credit rating system that better reflects Africa’s economic and political realities, ensuring a more accurate representation of its creditworthiness.
By capturing Africa’s unique economic strengths and challenges, AfCRA is expected to help nations improve access to lower-cost financing, attract investors, and accelerate economic growth.
Beyond sovereign ratings, the agency is also expected to assess regional organizations, municipalities, states and private-sector enterprises, helping to expand access to capital for a broader range of African entities.
Unlike traditional rating agencies, AfCRA will not rate countries or corporate organizations outside Africa.
Why are African leaders excited about it?
For years, African leaders have expressed frustration with the dominance of global credit rating agencies, accusing them of unfair and arbitrary assessments that misrepresent the continent’s economic realities.
A notable example is a January 2025 AU report that criticised Moody’s negative rating of Kenya’s economy in July 2024, calling it both premature and inaccurate. The report highlighted how, six months later, Moody’s reversed its stance, upgrading Kenya’s outlook from “negative” to “positive” without passing through the usual “stable” phase. Policymakers saw this as an implicit admission that the initial downgrade was flawed.
The AU also accused Moody’s of basing its assessments on temporary social unrest rather than Kenya’s underlying economic fundamentals.
In a similar instance, the AU pointed to Moody’s downgrade of Nigeria’s outlook to “stable” in January 2023, which was later reversed to “positive” by the end of the year. The union noted that such rapid shifts in outlook revealed the agency’s haste in its assessments.
Critics argue that incidents like these have far-reaching consequences on African economies.
According to the United Nations Economic Commission for Africa (UNECA), inflated risk perceptions drive up borrowing costs, making it harder for African nations to access affordable financing. The UN also estimates that unfair credit ratings drain an additional $75 billion from African economies—funds that could be better spent on infrastructure, healthcare, and education.
These persistent downgrades coupled with their economic implications have fueled calls for an African-led alternative, culminating in the creation of AfCRA.
While speaking at an AU summit on February 14, Nigeria’s president, Bola Tinubu, one of AfCTA’s latest supporters, argued that “an independent Africa-led rating agency will help provide fairer assessments of African economies and reduce the bias often observed in existing global rating agencies.”
The initiative has also been endorsed by the leaders of some of the largest African economies including President Paul Kagame of Rwanda and President Ruto, highlighting its significance.
In his remark at the summit, Ruto cited research showing that even a one-level improvement in Africa’s average credit rating could unlock an additional $15.5 billion in funding. “This alone would surpass Official Development Assistance by 12% and meet 80% of Africa’s infrastructure financing needs,” he said.
With AfCRA set to launch in June 2025, proponents see it as a transformative force that will restore investor confidence and help Africa take control of its economic narrative.
Who will run the AfCRA?
AfCRA will be managed and funded by the private sector, operating independently from the African Union (AU).
The African Peer Review Mechanism (APRM)—an AU governance agency—is overseeing its establishment, with a transaction advisory firm guiding its financial, legal, and structural decisions.
Ultimately, AfCRA’s governance structure and leadership will be determined by its shareholders, ensuring it remains a market-driven institution. This private-sector model is meant to boost investor confidence by ensuring the agency’s independence from political influence.
What methodologies will AfCRA use to assess creditworthiness?
AfCRA will use a mix of quantitative and qualitative indicators to evaluate a country or entity’s financial stability.
It will assess economic growth, debt sustainability, fiscal policies, political stability, and regional factors that global agencies often overlook.
The agency is expected to introduce a risk assessment model tailored to Africa, factoring in unique elements like informal economies, regional trade agreements, and infrastructure investments.
By using localised data sources and engaging African economists, AfCRA aims to provide a more accurate and context-driven assessment of credit risk.
How will AfCRA maintain transparency and fairness?
The AU has assured that AfCRA will follow strict governance measures to avoid conflicts of interest. It noted that the agency’s ratings will be based on publicly available data and verifiable economic indicators, using methodologies aligned with international best practices.
Additionally, independent audits, external reviews, and a diverse panel of financial experts will oversee its operations.
What does it mean if AfCRA succeeds?
The success of the African Credit Rating Agency (AfCRA) could be a game-changer for the continent’s economic landscape. Given the critical role credit ratings play in shaping global perceptions of lending risk, an independent and contextually aware rating agency could help African nations and businesses secure fairer assessments.
A more accurate credit rating system would lower borrowing costs, making it easier for governments and corporations to access affordable financing for infrastructure, healthcare, and industrial growth.
As an economist, Daouda Sembene puts it, “this work on improving credit ratings for African countries is extremely critical because it has a lot of implications. If you are able to improve your rating, it means that you can borrow at lower cost on the market.”
This has profound significance, particularly for Africa’s ability to finance sustainable development goals (SDGs). “When you look at all the trillions of financing that are needed in the Global South for achieving the SDGs and also the sustainable development objective of our countries, you cannot do it without having market access at a very high scale,” Sembene noted.
By improving credit ratings, African countries can reduce borrowing rates, free up resources for other priorities, and establish greater financial sovereignty.
Additionally, it would boost investor confidence, attracting more Foreign Direct Investment (FDI) and reducing capital flight driven by perceived risks.
Beyond governments, local companies also benefit from better sovereign credit ratings, as they often determine corporate borrowing rates. Small and medium enterprises (SMEs) can access credit more easily, fueling entrepreneurship and job creation.
Can AfCRA compete with the ‘Big Three’?
African policymakers have made it clear that AfCRA wasn’t created to replace Moody’s, S&P, or Fitch—rather it’s as an alternative source of credit analysis.
AfCRA’s role is to complement these agencies by providing an Africa-centric viewpoint. By addressing gaps in data, considering regional economic factors, and promoting financial integration within the continent, the agency aims to offer a more comprehensive assessment of creditworthiness.
However, for it to be taken seriously, experts say it will need to establish a strong reputation for accuracy, independence, and transparency—something that will take years, if not decades, to achieve.
Does Africa have what it takes to make AfCRA work?
Africa has the resources, expertise, and economic need to make AfCRA work, but success is far from guaranteed.
Proponents argue that an Africa-led rating agency will provide fairer credit assessments, reducing borrowing costs and attracting investment.
However, experts warn that credibility, funding, and political interference could undermine its mission.
“Gaining investor trust requires transparency, independence, and a proven track record—things AfCRA must build from scratch,” says financial analyst David Njoroge.
Moreover, the AU’s history of launching financial institutions raises doubts.
Institutions like the African Investment Bank (AIB) and the African Monetary Fund (AMF) were approved years ago but remain non-operational due to funding and governance challenges.
Without firm political will, sustainable financing, and private-sector confidence, AfCRA risks becoming yet another stalled AU initiative.
The real test is whether Africa’s leaders will provide the long-term commitment and institutional backing needed to make it work.
Will AfCRA break the cycle of failed AU financial institutions—or will it become just another unfulfilled vision? Only time will tell.
