President William Ruto has criticized global agencies and expressed his support for the establishment of the Africa Credit Rating Agency (AfCRA).
Ruto while speaking in Addis Ababa, Ethiopia on Friday, February 14, 2025, during a Presidential Dialogue on the Establishment of an Africa Credit Rating Agency said that the African continent’s economic potential is hamstrung by a financial system that misrepresents, distorts, and understates its reality.
Facilitated by the African Peer Review Mechanism (APRM), the event held on the margins of the 37th AU Ordinary Summit brought together Heads of State and Government, policymakers, financial experts, and development partners to deliberate on the operationalization of a dedicated credit rating agency for the continent.
President Ruto said that global Credit Rating agencies have let the continent down as they continue to rely on flawed models and outdated assumptions, adding that the whole system is also biased.
“The result is that they paint an unfair picture of our economies, and this has devastating effects because it leads to distorted ratings of what the situation is really. This also leads to exaggerated risks for our countries and continent and obviously and unjustifiably that leads to high borrowing rates,” said Ruto.
“These prejudice assessments come at an enormous cost to Africa. It deters investment, distorts global trade, and delays progress towards sustainable development goals.”
According to Ruto, the global agencies deny opportunities to investors and economies in African countries by mischarging them which in turn deprive nations of prosperity.
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Ruto explains why African countries should ditch global Credit Rating Agencies
The Head of State noted that APRM and the United Nations Development Program placed the cost of biased credit rating at $75 billion in lost opportunities.
“In a continent abundant in natural wealth vast arable land and billions in diaspora remittances, and the world’s largest carbon sinks credit rating agencies have delivered 94% of all downgrades in the past decade while arbitrarily designating only two African nations as investment grade.
The system punishes our economies while rewarding others even though the fundamentals are comparable and some cases even better,” added the Head of State.
Ruto further maintained that an Africa Credit Rating Agency must be globally credible and backed by rigorous and credible data, driven by high reporting standards that must reflect African realities correctly.
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He maintained that African Head of states will build alliances grounded in shared values of dignity equity and progress.
“We will hold rating agencies to account and demand accurate standards, leverage experience and expertise of Pan-African Credit Rating strengthening their capabilities and expanding their reach,” Ruto added.
About AfCRA
He maintained that a one-level improvement in Africa’s average credit rating would unlock $15.5 billion in additional funding, according to research.
According to him, this alone would outstrip Official Development Assistance by 12% and meet 80% of Africa’s infrastructure needs.
The Africa Credit Rating Agency (AfCRA) is a continental initiative aimed at providing independent, credible, and African-owned credit ratings for sovereigns, sub-sovereign and corporates.
Its primary objective is to enhance transparency, reduce reliance on the three international credit rating agencies, and address the specific needs of African countries, institutions and contexts.
The agency will provide an opportunity for the continent to have a credit rating system that reflects Africa’s unique socio-economic realities and fosters a fairer representation of its creditworthiness.
AfCRA is set to officially launch in June 2025 as part of the African Union’s broader agenda for financial integration and independence.
The establishment process is currently underway, including stakeholder consultations and capacity-building initiatives.
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