West African leaders seek to close credit rating divide amid push for financial equity

Abidjan, Côte d’Ivoire – As Africa faces rising debt burdens, fluctuating aid flows, and soaring borrowing costs, leaders from across West Africa convened for a high-level consultation in Abidjan, to seek solutions to bridge the credit rating divide and bolster equitable financial growth for the region.

Hosted over three days by the United Nations Development Programme (UNDP) in partnership with AfriCatalyst and the African Center for Economic Transformation (ACET), the regional meeting brought together government officials, think tanks, and financial experts to resolve why nearly half the region’s countries remain unrated by major credit rating agencies, a gap with profound implications for development financing and economic sovereignty in West Africa.

The Credit Ratings Disparity

Out of West Africa’s 15 countries, only a handful, including Nigeria, Ghana, Côte d’Ivoire, and Senegal, currently hold sovereign ratings issued by the likes of S&P Global, Moody’s, and Fitch. These ratings have enabled them to access international capital markets, issuing Eurobonds and attracting foreign investment to fund infrastructure and development projects.

Côte d’Ivoire, for instance, has repeatedly tapped international markets over the past decade, using its credit rating as a lever to secure financing. But for its unrated neighbors such as The Gambia, access to capital remains far more limited, forcing reliance on concessional loans, domestic debt, and bilateral arrangements, often under less favorable terms.

According to the United Nations Economic Commission for Africa (ECA) 2024 annual review, African countries witnessed an increase in positive credit rating actions in the second half of the year as compared to downgrades and negative outlooks, as was the case in the first half of 2024.

“S&P Global Ratings had the highest number of rating activities in Africa, with more positive changes in outlooks and rating upgrades. 11 countries had their ratings upgraded or experienced a positive change in outlook from negative to stable or from stable to positive. This dominant sentiment towards positive ratings reflects growing optimism about Africa’s political and economic prospects,” read the review.  

Still, barriers remain high for countries without credit ratings. Current S&P forecasts point at economic growth across rated African sovereigns. Rated countries are projected to outperform their 3.0% global GDP growth forecast, averaging 4.8%, a slight improvement from the 4.4% average the African region recorded in 2024.

Rethinking the Methodologies

The UNDP, AfriCatalyst Africa Credit Rating Advisory (AfCRA) Initiative, which guided much of the discussion, seeks to demystify the credit rating process. Former agency analysts and financial experts helped participants understand the technical mechanics of ratings, from presenting macroeconomic data to managing defaults and negotiating upgrades.

A central theme was the perceived subjectivity in current rating methodologies, which critics argue often fail to capture structural reforms or contextual economic progress. The African Development Bank (AfDB) estimates that more balanced assessments could save African nations up to $74.5 billion in borrowing costs.

Currently, out of 32 African countries holding major international ratings, only a handful are investment-grade, (Botswana, Mauritius, Morocco, and South Africa). According to the African Union, in 2025, most African countries were initially assigned sub-investment grade ratings, also known as junk status. The complexity and opacity of existing methodologies, further complicate foreign currency borrowing.

AfCRA, a homegrown solution piloted in several African countries, has identified common challenges like insufficient understanding of methodologies and limited capacity to present economic data. During the regional consultation, conversations pivoted repeatedly to the practicalities of obtaining and managing local currency ratings. Developing comprehensive sovereign credit rating requires in-depth analysis as well as the understanding of macro and microeconomic data; interpreting government balance sheets, general government debt and financing the SDGs, and the importance of growth metrics for sovereigns. This paints a more conclusive fiscal picture, unique to every country.

The Case for Local Currency Ratings

Beyond foreign-denominated debt, the consultation also spotlighted the importance of creating sovereign credit ratings in local currency. Though global capital markets still predominantly operate in dollars or euros, officials stressed the strategic value of strengthening local financial ecosystems through robust domestic bond markets and local currency credit assessments. These strategies can help reduce exposure to exchange rate volatility and help build economic resilience, particularly in a global environment marked by increasing trade protectionism and shifting geopolitical alliances.

However, the unique challenges and opportunities tied to local currency ratings present a valid frontier for developing reliable local currency credit ratings. This is vital for several reasons. Local currency ratings foster deeper and more liquid domestic capital markets. A robust local bond market allows governments to borrow from their own citizens and institutions, reducing reliance on volatile external flows.

This is especially pressing as countries like the United States have imposed blanket tariffs on African imports, escalating risks for those dependent on foreign-denominated debt. Meanwhile, emerging blocs such as BRICS have intensified calls for de-dollarization, aligning with Africa’s growing trade ties to the EU, China, and India, which together accounted for nearly half the continent’s trade in 2023.

Toward Financial Self-Determination

The consultations concluded with a note of cautious optimism. With strengthened capacity, better data, and closer dialogue with rating agencies, West African countries are better positioned to claim control over their fiscal narratives.

As the region pivots toward homegrown solutions, credit ratings, whether in foreign or local currency, will remain pivotal. But increasingly, African leaders are insisting they be part of the equation, not passive subjects of it.

About the Organizers;

The Regional Consultation is organized by UNDP, in partnership with AfriCatalyst and the African Center for Economic Transformation (ACET), and with support from the Government of Japan.

AfriCatalyst is an independent, global development advisory firm that strives to build partnerships between global and local actors to promote innovative, evidence-based solutions to Africa’s development challenges. Our proposed policy solutions are underpinned by a strong understanding of economic, political and social circumstances and linkages in African countries where we operate.

African Center for Economic Transformation (ACET) is a Pan-African economic policy institute supporting Africa’s long-term growth through transformation.

African Peer Review Mechanism (APRM) is the voluntary self-monitoring instrument for African Union member states whose aim is to promote good governance, political stability, and economic development.

The United Nations Economic Commission for Africa (ECA) is the regional UN commission established in 1958 to promote economic and social development in Africa. It is one of five regional commissions within the United Nations.