Africa’s new credit-rating agency has received backing from Afreximbank, supporting efforts to improve how investors assess the continent’s borrowers.
The Guardian reported that the bank welcomed the Africa Credit Rating Agency, or AfCRA, while stressing that its credibility must come from independent analysis, transparent methods and reliable data.
The agency launched in Mauritius on October 7. According to the UN Economic Commission for Africa, persistent risk premiums cost the continent approximately $75 billion annually in excess interest payments. That estimate does not establish that every borrowing premium is unjustified.
AfCRA aims to complement existing rating agencies by providing additional information about African economies. Its supporters acknowledge that a new agency alone cannot significantly reduce financing costs. Governments also need credible budgets, stronger economic fundamentals and dependable statistics.
The wider financing pressure connects with Finblog’s coverage of rising global bond yields.
The agency’s real test will be whether investors trust its assessments, including when those assessments are uncomfortable for the governments being rated.
Disclosure: This article does not represent investment advice. The content is for informational and educational purposes only.
