20 March 2024 The 6th Ordinary Session of the African Union’s Specialized Technical Committee on Ministers of Finance, Monetary Affairs, Economic Planning and Integration held in July 2023 – Nairobi, Kenya, adopted a declaration, ‘Endorsing the establishment of a private sector driven Africa Credit rating Agency based on selffunding and sustaining’. This was in line with the African Union (AU) Assembly of Heads of State and Government Decision [Assembly/AU/Dec.631(XXVII)] to develop more permanent solutions towards supporting Africa’s access to affordable capital.
With the support of strategic partners, the African Peer Review (APRM) in collaboration with the United Nations Economic Commission for Africa (UNECA) is convening a two-day Retreat in Lusaka, Zambia to discuss the next steps in operationalizing the Africa Credit Rating Agency. The AU has developed the legal, financial and structural aspects of the rating agency which supports the characteristics of sustainability, credibility and independence of the agency.
An Africa Credit Rating Agency is an important step towards intra-continental integration that would enable African governments to access capital and integrate the continent with global financial markets. There are still 22 African countries that have no credit ratings from the international rating agencies, which is a clear niche for the new rating agency. There is also tremendous value in the alternative rating sector, which cannot afford the cost of maintaining a rating from the international rating agencies. The agency will also be providing environmental, social and governance scores and foreign direct investment ratings. These rating services are urgently needed on the continent to complement governments’ efforts to support the development of domestic financial markets.
With the backing that comes from the support of the AU, it is envisaged that the rating agency will secure substantial business in the ratings of domestic instruments that are aligned with the continent’s goals. It will have the advantage of understanding the domestic context of Africa, issue more informative and detailed ratings than
those issued by the international rating agencies.
