The African Export-Import Bank (Afreximbank) has called for African ownership and independent standards to guide the newly launched Africa Credit Rating Agency, saying the institution must reflect the continent’s economic and institutional realities.
Afreximbank welcomed the launch of the Africa Credit Rating Agency, AfCRA, describing it as an important development for strengthening Africa’s financial architecture and deepening its capital markets.
Senior Executive Vice President of Afreximbank, Denys Denya, said the agency should develop a rating methodology tailored to African markets rather than simply adopt standards developed elsewhere.
“The rating methodology AfCRA develops must recognise the uniqueness of our environment and its institutional structures,” Denya said.
He added that AfCRA should “set its own standards” and develop an identity based on what he described as “African best practice”.
Denya also stressed the importance of maintaining the agency’s independence and ensuring that it remained under African ownership and control.
“Most importantly, AfCRA must set a new benchmark for the continent, maintain its independence, and remain wholly owned and controlled by Africans,” he said.
Afreximbank said the agency could help address gaps in credit information across African markets, where many governments, financial institutions and companies remain unrated.
Credit ratings influence investors’ assessment of risk and can affect the cost of borrowing for governments, financial institutions and businesses.
The bank said credible and independent credit analysis could provide investors with better information on sovereign, sub-sovereign and corporate borrowers, particularly in local-currency and regional debt markets that currently have limited coverage.
However, Afreximbank cautioned that the success of AfCRA should not be judged by whether it gives African borrowers more favourable ratings.
Rather, it said the agency should be assessed on the credibility of its analysis, quality of data and transparency of its methodology.
The bank said AfCRA should complement existing international and regional rating agencies by expanding the availability of credible credit analysis and promoting greater competition, transparency and analytical capacity in African financial markets.
Afreximbank also reiterated its position, alongside members of the Alliance of African Multilateral Financial Institutions, that African multilateral financial institutions should be assessed based on their fundamentals, performance, legal frameworks, mandates and operating models.
It said a proper understanding of these factors was necessary to ensure balanced and credible assessments of African risk.
The bank congratulated the African Union, African Peer Review Mechanism and other stakeholders involved in bringing AfCRA from the conceptual stage to its launch.
It said the new agency could become increasingly important as African countries seek to mobilise capital for industrialisation, trade, infrastructure and wider economic transformation.
According to Afreximbank, stronger African institutions capable of improving market information, investor confidence and financial-market depth would be critical to mobilising the capital required for the continent’s development.
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