Experts Call for Stronger Governance, More Robust Capital Markets and Market-Led Reforms to Unlock Affordable Finance for Africa

31 July 2026, Dakar, Senegal — Leading economists, development finance experts and credit rating specialists have called for a fundamental shift in how African countries strengthen access to capital, emphasizing that improving sovereign creditworthiness requires more than stronger fiscal performance. It also demands better governance, transparent institutions, credible economic policies, deeper domestic capital markets, and stronger collaboration to reduce the impact of sovereign credit ratings on access to affordable finance across the continent.

The call emerged during a high-level webinar jointly convened by AfriCatalyst and the African Peer Review Mechanism (APRM), titled “Credit Ratings and Development Finance: How Sovereign Credit Ratings Shape Corporate and SOE Financing,” where participants examined how sovereign credit ratings and sovereign ceilings shape financing conditions across Africa’s public and private sectors.

Participants emphasized that while sovereign credit ratings directly influence government borrowing, they also shape financing conditions for banks, state-owned enterprises (SOEs), infrastructure projects, and private companies, with far-reaching implications for investment, economic transformation, and sustainable development.

Opening the webinar, Dr. MC Bride P. Nkhalamba, Director of Governance and Specialised Reporting (Ag.) at the African Peer Review Mechanism (APRM), highlighted the importance of strengthening Africa’s creditworthiness foundations through better governance and stronger institutions.

“Understanding how sovereign credit ratings affect financing across the wider economy is critical if Africa is to close its infrastructure gap and accelerate economic transformation. Strong governance, transparent institutions, and policy predictability are fundamental to improving investor confidence and expanding access to affordable capital,” said Dr. Nkhalamba.

Echoing these sentiments, Dr. Daouda Sembene, Chief Executive Officer of AfriCatalyst, emphasized that sovereign credit ratings have implications far beyond government borrowing and called for stronger dialogue among key stakeholders to improve financing outcomes across the continent.

“When we talk about sovereign credit ratings, we often focus on governments. But sovereign ratings also have a major influence on the ability of corporations and state-owned enterprises to mobilise financing. Strengthening dialogue between African sovereigns, investors, credit rating agencies, and state-owned enterprises is essential to ensuring that sovereign credit ratings support, rather than constrain, access to finance for Africa’s development,” said Dr. Sembene.

The discussion highlighted that sovereign credit ratings serve as a common language of global financial markets, influencing not only government borrowing but also private investment, domestic financial systems, and long-term economic transformation. Participants noted that sovereign ceilings can constrain the ability of banks, SOEs, and private companies to secure financing, even where they have strong financial fundamentals, by linking their creditworthiness to that of their sovereign.

Expanding on the broader impact of sovereign credit ratings beyond government borrowing, Dr. Daniel Cash, Fellow (Non-Resident) at UNU-CPR underlined the importance of understanding how sovereign risk shapes financing conditions across the wider economy.

“The real issue is not only how governments borrow, but how sovereign risk transmits through the economy and constrains banks, businesses, and state-owned enterprises. Understanding that transmission is critical if Africa is to unlock long-term investment and economic transformation,” said Dr. Cash.

The webinar also highlighted encouraging trends across Africa’s credit landscape, with participants noting that the recent trajectory of African sovereign ratings reflects the progress many countries have made in strengthening their economic fundamentals while remaining mindful of evolving global risks. Paul Gamble, Senior Director, Sovereign Ratings at Fitch Ratings, said recent rating actions demonstrate the impact of stronger policy frameworks across the continent, while explaining that country ceilings remain an important consideration in determining how sovereign risk is transmitted to banks, state-owned enterprises and other entities.

“It has been quite a good story for ratings in the region. We have upgraded Côte d’Ivoire, South Africa and Ghana this year. We have actually got three countries now with positive outlooks: Ghana, Benin and Cabo Verde. That points to continued positive momentum for African ratings. What has been supporting ratings in the region have been real improvements in economic policy frameworks,” said Gamble.

Explaining how country ceilings operate in practice, Gamble noted that while some institutions can be rated above their sovereign under specific conditions, sovereign risk continues to influence financing across the wider economy.

“There are 16 African countries that have country ceilings above the sovereign rating, meaning entities can be rated above the sovereign rating. State-owned entities cannot be rated above the sovereign. For banks, you can be rated above the sovereign if you’re a very strong entity that has limited exposure to the sovereign. Ultimately, the ability to be rated above the sovereign is there. It is the country ceiling that is the important constraint, rather than the sovereign rating,” he said.

Building on this, Dr. Tatonga Rusike highlighted the growing importance of market-led ratings, noting that financial markets can often recognise improvements in economic fundamentals and policy credibility before these are reflected in formal sovereign rating actions. He said stronger investor confidence can translate into lower borrowing costs well ahead of official rating upgrades.

“The benefits of lower borrowing costs started with the markets, and the rating agencies came later as confirmation that things had indeed turned around. Ratings can work as a constraint, but investors can also look beyond what ratings are saying, especially if they believe the story before the data materialises,” said Dr. Rusike.

Participants pointed to concrete examples of this dynamic: in South Africa, declining bond yields signalled rising investor confidence months ahead of official rating actions, while in Nigeria, companies with strong fundamentals were able to access financing at lower costs than their sovereign.

Dr. Misheck Mutize, Lead Expert on Credit Rating Agencies at the African Peer Review Mechanism (APRM), noted that the relationship between African issuers and global credit rating agencies is becoming more transparent and evidence-driven, with governments and institutions increasingly engaging rating agencies and challenging assessments they believe do not accurately reflect economic realities. He emphasized that while different agencies may arrive at different conclusions, the ultimate objective should be to improve the quality of information available to investors and strengthen confidence in Africa’s capital markets.

“It’s not about favourable ratings. It’s not about better or higher ratings, but it’s about giving investors more accurate information or more opinions to choose from. The African Credit Rating Agency should be seen as an institution that strengthens the quality, diversity, and credibility of credit opinions available to investors, rather than one that simply delivers higher ratings,” said Dr. Mutize.

Participants agreed that unlocking affordable development finance for Africa will require sustained reforms to strengthen governance, policy credibility, data transparency, and domestic capital markets, alongside closer collaboration among governments, investors, development finance institutions, and credit rating agencies. They also underscored the role of innovative financing instruments, including guarantees and blended finance, in complementing these reforms and expanding access to affordable capital across the continent.