Africa Credit Ratings Agency Set to Launch in Mauritius

The Africa Credit Ratings Agency (AfCRA) is scheduled to begin operations in Mauritius on Wednesday, offering an African-based alternative to Fitch, Moody’s and S&P.

The agency is expected to assess the creditworthiness of African countries, businesses and institutions. Its supporters say it could provide another perspective on African economies, although questions remain over whether investors will accept its ratings as reliable and independent.

Backed by the African Union

AfCRA is backed by the African Union following nearly a decade of discussions. The African Peer Review Mechanism is the institution behind the initiative.

Mauritius was selected as the agency’s home partly because of its established financial services industry. AfCRA’s founders have said the organisation will operate without government interference, a claim that has not been independently verified.

The project is intended to address concerns that assessments by established global rating agencies can contribute to higher borrowing costs for African countries. The African Peer Review Mechanism says 23 countries on the continent are not rated by traditional credit-rating agencies.

Analysts have also argued that standard rating models may fail to capture parts of Africa’s informal economies because those activities are not always reflected in official data.

Focus on fairness and credibility

Nigeria’s President Bola Tinubu welcomed the planned agency last month. “Africa is not asking for favourable ratings,” he wrote on X. “We are asking for fair ratings, grounded in our fundamentals and in the reforms our economies are actually carrying out.”

Hannah Wanjie Ryder, chief executive of Development Reimagined, said AfCRA should not be viewed only as a reaction to dissatisfaction with existing rating agencies. Speaking at a seminar organised by Chatham House, she said the initiative’s “theory of change” was that it could “look with clearer eyes” at African economies.

However, analysts say the agency’s performance will ultimately be judged by the market. Jacob Oreki, a management consultant at Kenya’s Strathmore University Foundation, said African borrowers had long paid a high-risk premium and that conventional models could miss informal economic activity, domestic savings and reforms.

“But a rating agency is judged on independence and accuracy, not where it sits,” Oreki said. He added that if AfCRA did not downgrade an African sovereign when warranted, markets could view it as advocacy rather than an independent ratings institution.

Oreki said investors would use the agency’s assessments if they found them credible, “not because it is African.” Whether AfCRA will win that confidence, and whether it will issue negative ratings against African governments, remains uncertain.

High borrowing costs

Estimates from the Organisation for Economic Co-operation and Development show that Africa’s average borrowing cost in international markets was about $9 for every $100 in 2024. That compared with approximately $4.70 for emerging markets in Asia and $6.50 in Latin America.

AfCRA’s launch therefore comes amid a wider debate over how African economies are assessed and priced by international markets. Its stated role is to provide an alternative assessment, but any effect on borrowing conditions will depend on the credibility investors attach to its ratings.