Africa must rethink credit ratings to unlock domestic financing

Cape Town, 21 May 2025 – Unlocking domestic financing in Africa will remain difficult without
a fundamental shift in how credit ratings are applied to African economies. That was the core
message from government officials, economists, and policy experts at the opening of the Africa
Annual Credit Ratings Conference, held under the theme: “Unlocking Domestic Financing
through Credit Ratings.”

Speakers argued that meaningful access to African capital via pension funds, local bond markets,
and public investment requires fairer, more transparent credit assessments that reflect the
continent’s development priorities and structural progress.

Ambassador Marie-Antoinette Rose Quatre, CEO of the African Peer Review Mechanism
(APRM), said the continent remains underrepresented and often misjudged by dominant global
credit rating agencies. Twenty-two African countries, almost 40 percent of the continent, still
lack any sovereign credit rating, and fewer than 10 percent of corporates and public institutions
are rated.

“Credit ratings are no longer a peripheral matter on our continent. They sit at the heart of
Africa’s economic and developmental aspirations,” she said. “This gap is not merely statistical. It
is a direct barrier to Africa’s economic transformation and financial independence.”

Zuzana Schwidrowski, Director of Macroeconomics, Finance and Governance at the United
Nations Economic Commission for Africa (ECA), said that low or absent ratings continue to
raise borrowing costs and shrink fiscal space, even for countries that have implemented strong
reforms.

“Africa’s development should not be held hostage by narrow perceptions of risk,” she said,
adding that “improving sovereign and sub sovereign credit ratings is not just about better access
to capital markets. It is about building confidence, promoting fiscal responsibility, and unlocking
the vast potential of domestic resource mobilization.”

Ms Schwidrowski pointed out that ECA is supporting countries to improve debt data systems,
strengthen fiscal risk management, and issue local currency bonds to reduce reliance on external
debt.

Patrick Sokhela, Acting Deputy Director-General at South Africa’s Department of Public Service
and Administration, focused on the importance of creating African-owned solutions. He
emphasized that the Africa Credit Rating Agency (AfCRA), backed by the African Union, must
not replicate the practices of the dominant international firms.

“African countries are facing several challenges in their dealings with the ‘big three’ dominant
international credit rating agencies… including inaccuracies, biases, and exaggerated negative
risk perceptions,” he said.

Mr Sokhela stressed that AfCRA must be guided by the principles of good governance and
democracy, as outlined in the APRM Statute, and operate through a developmental lens rooted in
Africa’s Agenda 2063.

Daouda Sembene, CEO of Africatalyst, also addressed concerns over long-standing rating issues,
noting that poor transparency and outdated perceptions continue to hurt Africa’s ability to
finance growth.

“For too long, Africa’s development potential has been undermined by weak credit ratings,
limited transparency in sovereign credit risk assessment, and exaggerated risk perceptions,” he
said. “These challenges have translated into high borrowing costs, constraining public and
private investment, and limiting African countries’ ability to respond to the needs of their
people.”

Delivering the keynote, Sunil Benimadhu, CEO of the Stock Exchange of Mauritius, said that
building a sustainable financing ecosystem requires credit ratings that help reduce uncertainty,
enable better risk pricing, and support long-term capital flows.
“Credit ratings are not merely symbols. They are systems. They shape behavior. They shape
pricing. And they shape capital flows,” he said.

Mr Benimadhu cited examples where African countries that developed local rating capacity, such
as Côte d’Ivoire, Nigeria, and Mauritius, were able to tap domestic capital markets more
effectively, lower interest costs, and attract pension fund investment.

The two-day conference is co-hosted by APRM, UNECA, UNDP Africa, and Africatalyst. It
brings together government officials, regulators, development finance institutions, credit rating
agencies, and private investors to explore how Africa can shape a more credible, equitable credit
rating framework in line with its development goals.