AfCRA: The credit challenge
Wednesday, 7 October 2026, saw the launch of the Africa Credit Rating Agency (AfCRA) in Port Louis, Mauritius. The agency is the culmination of a long-standing push by African leaders for a more Africa-focused approach to sovereign credit ratings. It has been endorsed by the African Union (AU) and established with the support of the AU’s African Peer Review Mechanism (APRM).
African leaders have long criticised the assessments and ratings issued by the three major global agencies, S&P Global, Moody’s and Fitch, arguing that they do not always adequately reflect Africa’s unique economic circumstances and can be too quick to downgrade countries during periods of crisis. Moreover, 23 of Africa’s 55 countries currently do not have ratings from the three agencies.
Why does it matter?
A country’s credit rating indicates its creditworthiness. Put simply, it reflects how likely a country is to default on its debt. The higher the perceived risk of default, the more expensive it can become for a government to borrow in international capital markets.
When borrowing costs and debt-service payments are high, governments have less fiscal space to spend on services and investment, including education, healthcare, sanitation, roads and other infrastructure. Governments carrying heavy debt burdens may also face pressure to raise taxes, reducing households’ disposable income and potentially affecting their quality of life.
The effects can be profound. Kenya’s 2024 Finance Bill, which proposed a range of tax increases, triggered mass youth-led protests amid broader frustration over the cost of living, taxation and governance. The demonstrations became violent, with deaths, injuries and damage to public property. The episode was a stark reminder that fiscal pressures can become a source of social and political instability.
Credit ratings, therefore, are not some distant concept confined to financial markets. They can influence the cost of capital available to governments and businesses, with consequences that ultimately reach ordinary households.
Are the suspected biases against Africa real? The evidence is mixed. A Reuters investigation found no evidence of systemic bias by the major rating agencies, while other research has identified a statistically significant downward bias in the ratings assigned to some African sovereigns.
Potential savings
A 2023 study by the United Nations Development Programme (UNDP) estimated that African countries could save up to US$74.5 billion if credit ratings were based on less subjective assessments. The figure reflects the potential cost of higher interest payments and foregone financing opportunities.
The AU has also reported that Africa’s annual external debt service rose from US$61 billion in 2010 to US$163 billion in 2024. That is a substantial increase, and the consequences extend beyond access to affordable loans. Credit ratings can also influence how investors perceive a country’s investment appeal.
Is my money safe in your country? Once I bring my money into your country, will I be able to take it out later? Credit ratings form part of the information investors use when answering questions such as these.
For a country such as Namibia, with the ambitious goal of creating 500,000 jobs over the next five years, access to investment will be critical. A weaker credit rating can increase financing costs and potentially make some investments less attractive.
And what about you as an individual?
You know those monetary policy announcements made by the Bank of Namibia when it changes the repo rate?
The repo rate is the rate at which commercial banks borrow from the Bank of Namibia, and changes in it influence other interest rates across the economy. A higher cost of funding for banks can feed through into higher borrowing costs for households and businesses.
But there is an important distinction: Namibia’s repo rate is not simply determined by the country’s sovereign credit rating. The Bank of Namibia considers domestic and international economic conditions, financial stability and, importantly, the need to safeguard the Namibia dollar’s one-to-one peg with the South African rand.
Credit ratings matter elsewhere in the financial system. They can influence the cost at which governments and other borrowers access capital, and can affect broader perceptions of risk. The cheaper it is to borrow, the more scope households and businesses have to use credit for productive purposes, such as buying a home or starting or expanding a business.
Debt, when managed properly, can be a useful financial tool. That is the essence of leverage: using borrowed money to finance an asset or activity in the expectation that it creates value.
AfCRA: From complaint to action
Rather than simply complaining about perceived unfairness, the AU endorsed the establishment of AfCRA, which became a reality with its launch on 7 October.
I think that is significant.
Yes, we can argue that it took too long, but the project has now been delivered. More importantly, AfCRA is designed to be privately owned, privately funded and operationally independent. Governments cannot own shares in the agency, a safeguard intended to reduce political influence and conflicts of interest.
The choice of Mauritius also makes strategic sense. The country is an established financial hub and provides a strong base for an agency seeking to attract investors and operate across African markets.
The credibility test
AfCRA’s success, however, will ultimately be judged by its credibility.
Its biggest test will come during periods of crisis and market stress, when pressure on ratings agencies is at its highest. The agency will need to demonstrate that its assessments are independent, rigorous, transparent and consistent with international standards.
AfCRA does not have to agree with the established global agencies simply for the sake of being different. Its value will come from producing ratings that investors regard as credible, while incorporating the economic realities and data that it believes are sometimes overlooked.
Only time will tell whether this becomes the game changer I believe it could be.
Ndeyapo Shilongo is the Executive Director of Corridor Capital Hub, a seasoned strategy, finance and project management executive with over a decade of experience in both the private and public sectors.
