Mauritius, April 25, 2024 – The African Peer Review Mechanism (APRM) and CARE Ratings (Africa) Private Limited (CRAF), the first credit rating agency in Mauritius and a subsidiary of CARE Ratings Ltd., have signed a Memorandum of Understanding (MoU) to collaborate in developing credit ratings in Africa.
The signing ceremony was graced by the Hon. Renganaden Padayachy, Minister of Finance, Economic Planning, and Development in Mauritius. This collaboration between CRAF, the leading credit rating agency in Mauritius, and the APRM, an autonomous entity promoting good governance, aims to broaden opportunities for developing Africa's capital markets.
The APRM’s mandate to undertake this work is in line with the Policy Framework of mechanisms to support AU member states to improve their credit ratings. These mechanisms of support to the development of domestic financial markets include promoting an enabling environment to allow the establishment and growth of domestic credit rating companies, and expanding the number of rated countries and instruments, accelerate the development of domestic capital markets and improve governments’ access to affordable capital.
It is the African Union’s objective to collaborate with credible institutions of systemic importance for the AU aimed at cohesive economic integration and which includes the establishment of a Pan African Credit Rating Agency, in accordance with Article 19 of the AU Constitutive Act of 2002.
Among the areas of collaboration is to work together on the establishment of Africa Credit Rating Agency (AfCRA) which will contribute to ensuring objective and accurate assessments of African countries, thereby facilitating access to financing at competitive rates and supporting the development of local capital markets. Impartial and credible assessments of credit risks in Africa could help as one of the valuable inputs for informed investment decisions by investors and institutions.
"Through the establishment of AfCRA, we are promoting transparency and confidence in the continent's financial markets, paving the way for new investment opportunities and sustainable growth," says Mr. Mehul Pandya, MD and CEO of CareEdge Group.
To date, sovereign risk ratings in the African Union are assigned by three major international rating agencies. Their rating approach are not very transparent. As a result, the developing countries nuances, and African realities are not fully explained. Leveraging its expertise, CareEdge Group will help develop methodologies and rating models for sovereign ratings, taking into account the complexities and dynamics of emerging economies as well.
CARE Ratings (Africa) Private Limited (CRAF) was established by CareEdge Group in 2014 and is licensed by the Financial Services Commission of Mauritius and the Capital Markets Authority of Kenya, bring with it over three decades of expertise. The agency is well-positioned to support the development of capital markets in Africa. By assessing sovereign ratings of 40 countries, including 7 African countries besides Mauritius, CareEdge Ratings aims to contribute significantly to market transparency and credibility.
