Africa must rethink credit ratings to unlock domestic financing - Experts

At the conference, the leaders noted challenges in domestic financing because of lack of a reform in applying credit ratings to African economies.

Kenya Revenue Authority (KRA) chairperson Ndiritu Murithi criticized what he termed, “the growing reliance on perception rather than data in rating African nations”. 

“Last year, there were protests in over 100 countries. In the West, they were seen as expressions of democracy. In Africa, the same events were labeled as instability—and our credit ratings suffered. That’s unfair,” said Muriithi. 

Speakers at the conference argued that accessing African capital through pension funds, local bond markets and public investments demands more accurate, transparent and fair assessments that reflect on the structural reforms and development goals of the continent.

“Africa remains under-represented and frequently misjudged by global credit rating agencies with 22 countries in the continent lacking sovereign credit rating while fewer than 10% of public institutions and corporates in possession of a rating”, said Ambassador Marie-Antoinette Rose Quatre, CEO of the African Peer Review.

Ambassador Quatre mentioned that the continent’s credit ratings are no longer a peripheral matter, but they sit at the heart of the continent’s economic and development aspirations.

Safaricom PLC’s Head of Financial Planning and Investor Relations, Caroline Wambugu called for credit rating models that reflect Africa’s growth potential and demographic rates in a better manner. 

“Africa will host 25% of the world’s working-age population by 2050. Yet only two countries on the continent hold investment-grade ratings. This keeps foreign capital out and drives up borrowing costs,” said Wambugu.

She cited the success of mobile money platforms like M-PESA and Vodacom Cash, both of which have a large base of active users sprawling into millions, as evidence of untapped potential in the continent’s financial ecosystem.

“Credit ratings are nott just symbols, but systems that shape behaviour, pricing and capital flows”, said Sunil Benimadhu, CEO of Mauritis’ Stock Exchange and the conference’s keynote speaker.

Benimadhu highlighted how countries like Côte d’Ivoire, Nigeria, and Mauritius developed local credit rating capacity which led to the successful reduction of interest costs, attracted pension fund investments hence strengthening access to domestic capital.

The two-day conference, co-hosted by APRM, UNECA, UNDP Africa, Africatalyst, Ecocapp Capital, Huawei, Safaricom, Metropol Corporation, and Awesome Concepts Limited, brought together policymakers, regulators, development finance institutions, investors, and rating agencies to discuss how Africa can build a more credible, development-focused credit rating system.

“Low or missing ratings continue to raise borrowing costs—even for reform-driven countries”, warned Zuzana Schwidrowski, MacroEconomics Director, Finance and Governance at the UN Economic Commision for Africa (ECA).