At the UN General Assembly, African leaders call for reform of “prejudiced” credit ratings 

On the sidelines of the United Nations General Assembly, African leaders and global partners turned their attention to a subject that rarely dominates the headlines but carries enormous consequences: the global financial system, and Africa’s struggle to secure fair access to capital.

In a conference room at the African Union’s Permanent Observer Mission, AfriCatalyst, in partnership with the African Peer Review Mechanism (APRM), the United Nations Economic Commission for Africa (UNECA), the United Nations Development Programme (UNDP), the African Center for Economic Transformation (ACET), convened officials, economists and development experts for a blunt discussion about how the world’s most powerful credit-rating agencies — Moody’s, Fitch and S&P Global — influence the cost of borrowing for the continent. 

The session, titled “Reconfiguring Global Credit Rating Practices: African Perspectives on Reforming the Financial Architecture,” underscored the technical complexity of the issue, but also the urgency and potential of homegrown solutions such as the African Credit Rating Agency (AfCRA) to provide a viable alternative. 

The Price of Money

Daouda Sembene, Chief Executive Officer of AfriCatalyst, reminded the room that ratings are not abstract calculations but choices with profound consequences. “Rating agencies have the power to influence issues that directly affect the living conditions of African populations,” he said. “Every dollar that African countries allocate to debt service in an undue manner is a dollar diverted away from schools, hospitals, roads, and other essential infrastructure. These issues must not only be analyzed through a technical lens, but through their human impact.”

The figures are sobering. Of the continent’s fifty-four nations, just two are “investment grade” status. Yet Africa as a whole, pays on average three times more to borrow than advanced economies. “Africa deserves a realistic assessment of its risk profile,” said Vincent O. Nmehielle, Secretary-General of the African Development Bank (AfDB). “We are working closely with the African Peer Review Mechanism and other partners to ensure that African countries can access capital more cheaply and fairly.”

Reform as Justice

For Ahunna Eziakonwa, UNDP’s Regional Director for Africa, the question was not simply technical but moral. “Countries in developed regions borrow at about 2%,” she observed. “In Africa, it ranges from 8-12%. Even when African countries secure favorable ratings, they often still pay more than their peers elsewhere. That is prejudice. And prejudice makes this a justice issue.”

Francesca Belubbe, of the African Union Commission, noted the irony of recent downgrades. Between 2020 and 2022, more than half of rated African countries were marked down, even as actual default rates on the continent hovered below 2%—the lowest globally. The annual cost of such distortions, she said, amounts to roughly $5 billion annually.

AfCRA at Play

A consensus emerged among the high-level speakers that Africa cannot wait for external goodwill. Claver Gatete, Executive Secretary of the U.N. Economic Commission for Africa, called for the rapid operationalization of the African Credit Rating Agency (AfCRA). Mauritius, the first nation to subject itself to its assessment, had already endorsed its credibility. 

“Mauritius’s decision to be the first country rated by AfCRA is a resounding endorsement of this new African institution,” he said. “But it must be scaled up quickly. We also need innovative financing tools to shield countries from future shocks. Africa cannot remain dependent solely on conventional debt.”

James Daya, of the African Union, framed AfCRA as not merely a technical corrective but a political instrument. “This is not just about creating an alternative to the Big Three,” he said. “It’s about ensuring Africa has a seat at the table and the power to set its own agenda.”

Daya also called for stronger partnerships with African multilateral institutions. “The African Union is advancing its financial institutions, and an African-led rating agency will help them access funds based on fairer assessments. AfCRA must work in alliance with banks like the AfDB to establish a coherent continental financial architecture.”

Beyond Ratings

There was talk, too, of innovations that could blunt the volatility of global markets such as local-currency bonds, climate contingency clauses, and hedging instruments. Côte d’Ivoire’s CFA franc–denominated bond was cited as a case in point, evidence that Africa can innovate its way toward stability. “Such innovations stabilize planning and ensure that, in times of crisis, governments can prioritize their people over creditors,” Gatete said.

But Gatete stressed that financial reform must be tied to Africa’s structural transformation. “Credit ratings will reflect Africa’s true potential only when our economies are diversified, our value chains are regionalized, and our youth are empowered to drive industrialization and innovation. Finance should be the engine that accelerates Africa’s progress, not the brake that slows it down.”

The prejudice premium, as several speakers described it, carries a staggering toll. An estimated $75 billion in lost potential revenue each year, according to the United Nations Development Programme, alongside a $200 billion financing gap in trade and investment. What Africa faces is not a risk premium, but a prejudice premium stemming from misconceptions of risks and a lack of understanding of the continent’s economic realities, compounded by the inertia of global institutions. It deters investment, worsens debt burdens, and constrains development despite Africa’s resources and human potential.

In closing, Daouda Sembene returned to the larger principle. “The establishment of AfCRA is not only an African milestone, it is a global public good. A fairer financial system is in the interest of all, because sustainable development in Africa strengthens resilience and stability worldwide.”