AfCRA targets March for first sovereign ratings as 15 African countries enter talks

The Africa Credit Rating Agency (AfCRA), established to provide an alternative assessment of the continent’s creditworthiness, is in discussions with 15 African governments and expects to publish its first sovereign ratings before the end of March.

The Mauritius-based agency is preparing to begin research in several countries, including Togo, Kenya, Seychelles, Burundi and Mauritius, as it moves towards its first assessments, interim Chief Executive Officer Sifiso Falala told Reuters.
“We will be in a position, by March, before the end of March, to have released results,” Falala said in an interview.

Launched last month following an African Union initiative dating back to 2018, AfCRA aims to provide an additional perspective on African sovereign risk at a time when governments across the continent are grappling with rising debt-service costs and expensive access to international capital markets.

The agency intends to challenge the influence of the three dominant global credit rating firms — S&P Global Ratings, Moody’s and Fitch Ratings, whose assessments play a significant role in shaping how international investors price African government debt.
African leaders have repeatedly argued that the major agencies underestimate the continent’s economic prospects and respond too quickly with downgrades during periods of financial stress.

The rating firms have rejected allegations of systemic bias, maintaining that they apply consistent methodologies across markets.

A 2024 Reuters investigation into Africa’s debt crisis found no evidence of systemic bias in the sovereign ratings issued by the three agencies.

AfCRA says its approach will place greater emphasis on research into African economies and rely less heavily on data from international financial institutions such as the International Monetary Fund.
Its proposed model will initially focus on solicited sovereign ratings, under which governments pay for assessments and provide access to relevant officials and financial information.

The agency also plans to assess African multilateral lenders, including the African Export-Import Bank (Afreximbank), as well as private financial institutions.
The initiative comes as debt servicing continues to absorb a growing share of government revenue across Africa, leaving less room for infrastructure, healthcare, education and other development priorities.

Falala put Africa’s total debt at approximately $1.9 trillion and estimated that African economies pay an additional $75 billion annually in interest costs compared with borrowers elsewhere.

Data from the African Union show that the continent’s annual external debt-service bill rose to $163 billion in 2024, from $61 billion in 2010.

The increase reflects the growing pressure on African governments as borrowing needs expand and financing conditions remain challenging.Credit ratings matter because they influence the interest rates governments pay when issuing international bonds and accessing other forms of financing.

A lower rating can increase the yield investors demand, raise refinancing costs and, in some cases, restrict access to funds from institutional investors whose mandates require minimum credit ratings.

For African governments, the expectation is that a rating agency with deeper local research and a stronger understanding of domestic economic conditions could provide investors with additional information when assessing sovereign risk.

However, the credibility of AfCRA will depend on the quality of its research, the consistency of its methodologies and the confidence investors place in its assessments.An alternative rating will not automatically reduce borrowing costs, particularly if international investors continue to rely heavily on the established agencies.

AfCRA is privately owned, with governments barred from holding equity in the agency. It is owned by Plus 94 Research, a South African research company co-founded by Falala and Tirhani Mabunda.

The agency plans to raise $15 million through a share sale that would give African investors a two-thirds ownership stake, according to Falala.

It has also completed the acquisition of a 51% stake in Sovereign Africa Ratings, a South African credit rating firm founded and run by Falala.
The ownership structure is intended to keep governments from exercising direct shareholder control over the agency, although the independence and transparency of its rating process will ultimately be judged by how it manages potential conflicts of interest and applies its methodologies.

AfCRA’s first ratings will therefore be an important test of its ability to establish credibility in a market dominated by long-standing international institutions.

Its success will depend not simply on offering different assessments, but on producing research that governments, lenders and global investors consider reliable enough to influence financing decisions.