Now Is The Right Time To Lay Out An African Sovereign Credit Rating Agency — Finance Minister

Dr. Mohammed Amin Adam has tossed his weight behind calls for laying out an African sovereign credit rating agency.

He induce this would guarantee a decent, exact, and complete evaluation of credit risks, facilitating access to competitive capital and fostering domestic financial market development across the continent.

In a media interview, the Finance Minister complained about the unreasonable evaluations of developing nations by international rating organizations.

“If we have our own rating agency, we will have an alternative professional second opinion. When challenged, the facts can be brought to bear, and I think the African Development Bank should lead by organizing stakeholders to determine the modalities,” he stated.

Dr. Adam further underlined that such a stakeholder meeting is pivotal to fabricate credibility that would mirror the assessment given to African countries.

AfDB Calls For A Strong Approach To Address The Challenges Facing The World

According to a United Nations Economic Commission for Africa report, in the first half of 2023, the top rating agencies issued 13 negative decisions to 11 African countries, including downgrades and negative outlook assessments.

The report stated,

“These developments have reversed the optimism among investors on the international financial markets that African countries are recovering from the devastating Covid-19 economic shocks.”

Also, President Akufo-Addo additionally communicated comparative opinions while addressing the 35th Africa Union summit in Addis Ababa Ethiopia. He said,

“We need to guard against the continuing consequential stranglehold of rating agencies, which has affected the cost and access to capital markets for African countries”.

Addressing the 2024 African Development Bank’s Annual Meetings in Nairobi, Kenya, President William Ruto also called on AfDB President Akinwumi Adesina to establish an African Credit Agency and conduct a comprehensive review of African states’ Gross Domestic Product (GDP) to reflect their true economic status.

President Ruto revealed what discernments had meant for Kenya’s FICO score on Eurobond issuance, expressing,

“Kenya faced higher interest rates due to geopolitical conflicts far removed from its borders, such as the conflict in Niger. Niger is 4,585 kilometers away from Kenya, but perceptions in places like Washington link our fates.”

The three major international rating agencies – Fitch Ratings, Moody’s, and S&P – have come under intense scrutiny as many countries have questioned their sovereign credit ratings.