By Saul Molobi
In a bold step toward reshaping Africa’s economic landscape, Mr. Claver Gatete, United Nations Under-Secretary-General and Executive Secretary of the Economic Commission for Africa (ECA), addressed the High-Level Dialogue on the establishment of the Africa Credit Rating Agency (CRA). This discussion, held on the sidelines of the 2024 UN General Assembly in New York, 20 September 2024, underscores Africa’s determination to address persistent global financial challenges and chart a new course for the continent’s economic independence.
In his opening remarks, Mr. Gatete highlighted the critical importance of credit ratings to Africa’s economic future. “The significance of credit ratings for Africa’s progress is undeniable,” he emphasized, pointing to the continent’s ongoing struggles with the three dominant international rating agencies—S&P Global Ratings, Moody’s, and Fitch Group. These agencies, according to Mr. Gatete, have consistently underserved Africa, with chronically low ratings that do not reflect the continent’s true economic potential.
The Need for Change: Addressing Africa’s Credit Rating Dilemma
Africa’s current relationship with these global rating agencies is far from equitable. Of the 33 African countries with sovereign credit ratings, only two — Botswana and Mauritius — are in the investment-grade category. Meanwhile, countries like Ethiopia, Ghana, and Zambia have defaulted on their sovereign debts, leading them to approach the G20 Common Framework for debt treatment, a process Mr. Gatete described as “lengthy and complex.”
The numbers are stark: in 2024 alone, Africa is expected to pay $163 billion in interest payments. This situation is exacerbated by repeated downgrades from the major rating agencies, which have led to rising borrowing costs, reduced investor confidence, and capital flight. The fiscal space of African nations is shrinking as a result, with many governments spending more on external debt interest than on essential social and climate-related investments.
“The current trajectory is unsustainable,” Mr. Gatete warned. “These trends cannot continue if we are serious about Africa becoming a global solutions powerhouse.”
Africa’s Vision: A Homegrown Credit Rating Agency
The establishment of an African Credit Rating Agency, Mr. Gatete explained, is a crucial step towards economic self-reliance and more accurate credit ratings for African nations. He acknowledged that the process of developing such an agency comes with challenges but affirmed that the benefits outweigh the costs.
“A functioning Africa Credit Rating Agency brings both costs and benefits, but on balance, it is a positive development,” Mr. Gatete stated. However, he cautioned that success will depend on coordinated efforts at the national, regional, and continental levels, along with managing expectations regarding the agency’s commercial success and investor trust in the early stages.
At the national level, Mr. Gatete urged African governments to focus on strengthening their macroeconomic policies, improving governance, and enhancing the quality and transparency of their financial data. These measures, he stressed, are essential to improving the continent’s financial stability and fostering stronger relationships with global investors. Additionally, Africa’s regulatory environment for the ratings process needs to draw on global best practices, including lessons from Europe’s response to its own debt crisis over a decade ago.
A Strategic Opportunity for Africa
Mr. Gatete painted an optimistic picture of the future, one where an Africa-centric credit rating agency could serve as a complementary alternative to existing global agencies. By building local expertise, the CRA would expand Africa’s corporate ratings market, attract new investments, and offer an African-centered perspective based on rigorous research.
“If well done, these actions can help build market confidence and trust,” he said, highlighting the ECA’s ongoing work with the African Peer Review Mechanism (APRM) to produce an annual Africa Sovereign Credit Ratings Report. This report provides insights into rating actions across the continent and offers policy recommendations to African governments.
In partnership with other UN agencies, the ECA is also committed to building national capacities through e-learning programs and targeted technical assistance, with countries such as Mali, Guinea, and Ethiopia already benefitting from these initiatives. This capacity-building effort is vital to ensuring that African nations are prepared to interact effectively with global rating agencies.
The Road Ahead: Building Partnerships and Strengthening Africa’s Financial Markets
As Africa moves forward with the establishment of the CRA, Mr. Gatete called for ongoing dialogue, innovative ideas, and strong partnerships. He expressed confidence that the new agency will enhance Africa’s credit ratings, improve access to international bond markets, and contribute to the broader development of Africa’s financial systems.
In conclusion, Mr. Gatete urged African nations to seize this moment to reshape their financial futures. “There is no reason why Africa cannot look ahead with optimism,” he said, envisioning a future where the continent’s economies are no longer subject to unfair downgrades and limited fiscal space.
The establishment of the Africa Credit Rating Agency, he affirmed, is not just an economic necessity — it is a step toward the continent’s full participation in the global financial system, driven by its own rules and ambitions.
With this initiative, Africa positions itself not only as a player in global markets but as a leader in developing innovative financial solutions tailored to its unique needs. The dialogue on the Africa Credit Rating Agency signals that Africa is ready to reclaim control of its financial destiny.