Africa is set to launch its own credit ratings agency next month, in a move aimed at providing an alternative to the major international ratings firms.
Paul Sikazwe, Technical Adviser on Debt at the African Union Commission, says the African credit ratings agency will be launched in Mauritius on October 5.
Speaking at a conference on debt and development in Nairobi, Kenya, organised by campaign group Afrodad, Sikazwe described the launch as a major step towards reforming the international financial architecture.
The African Peer Review Mechanism, or APRM, has been working for several years to establish an agency that will assess the creditworthiness of African sovereigns.
The initiative comes amid long-standing criticism from African leaders that major global ratings agencies, including Fitch, Moody’s and S&P Global, do not adequately reflect the risks and economic realities of African countries.
They have also accused the agencies of being too quick to downgrade African economies during major crises, including conflicts and pandemics.
The international ratings agencies have rejected those criticisms, maintaining that they apply the same methodology when assessing countries around the world.
The debate over credit ratings comes as debt pressures remain a major concern across Africa.
Heavy borrowing, economic mismanagement and external shocks have pushed countries including Zambia, Ghana and Ethiopia into sovereign debt defaults in recent years.
The African Union is also pursuing broader reforms to strengthen the continent’s financial independence.
Sikazwe says the AU is working towards greater coordination among its 54 member states on debt-related issues.
He says an African Monetary Institute is expected to be inaugurated in Abuja in late October. The institution is intended to serve as a precursor to the establishment of a regional central bank.
The initiatives form part of wider African efforts to strengthen the continent’s financial architecture and reduce its vulnerability to external financial pressures
