African Union to launch continental credit rating agency in October, adviser says
By Aboki Forex —
The African Union will launch a continent-wide credit rating agency in October, a technical adviser said, as African policymakers seek to cut high borrowing costs and reform the international financial architecture.
Paul Sikazwe, technical adviser on debt to the African Union Commission, said the new African credit rating agency will be officially launched in Mauritius. He said the initiative represents progress towards Africa's broader ambition to push for reforms to the international financial system.
An alternative to the big three
The agency is an initiative of the African Peer Review Mechanism (APRM), an African Union-backed body. The APRM has been working for several years to establish an agency capable of assessing the creditworthiness of African countries.
The initiative is intended to provide an African-based alternative alongside the three dominant international credit rating agencies: Fitch Ratings, Moody's Ratings, and S&P Global Ratings.
What this means for African borrowers
African policymakers have long pushed back against the existing international credit rating system, arguing that it leads to higher borrowing costs for the continent. The planned launch in October is a direct response to that concern.
By creating an African-based rating agency, the AU hopes to give governments and businesses on the continent a new path for credit assessments, outside the dominance of the global agencies.