AU Launches Africa’s First Credit Rating Agency

The African Union (AU) is set to launch the Africa Credit Rating Agency (AfCRA), the continent’s first continental credit rating agency, in Port Louis, Mauritius, on Wednesday.

The agency, which has been in development for nearly a decade, is expected to provide independent assessments of the creditworthiness of African governments, businesses and financial institutions.

The AU said AfCRA will offer a perspective based on African data, expertise and economic realities while complementing existing global credit rating agencies.

The agency is expected to provide an alternative to the three major global rating agencies, Moody’s, S&P Global and Fitch, which have faced criticism from some African leaders over their assessment of the continent’s economies.

However, the agencies have rejected allegations of systematic bias, saying they apply their methodologies globally. A 2024 Reuters investigation found no evidence of systemic bias in the sovereign ratings assigned to African countries by the three agencies.

According to the AU, AfCRA will operate independently and will be funded through shareholder capital and its operations. Governments will not be allowed to own shares in the agency, according to the AU’s framework.

The agency is expected to help African countries gain better access to capital markets and potentially reduce borrowing costs by providing investors with more context-specific assessments of African economies.

The AU said 23 African economies currently do not have ratings from the three major global agencies, leaving AfCRA with an opportunity to expand credit-rating coverage across the continent.

The launch comes as African countries face growing debt pressures. The AU said Africa’s annual external debt service rose from $61bn in 2010 to $163bn in 2024, with debt-servicing costs exceeding spending on health or education in many countries.

AfCRA was endorsed by African leaders in 2018, with the African Peer Review Mechanism (APRM) overseeing aspects of its establishment and development.

The agency will be headquartered in Port Louis, Mauritius, with the AU saying its operations will focus on sovereigns, sub-sovereigns, corporates and public and private institutions.

The success of AfCRA will depend largely on whether investors consider its ratings credible and independent, particularly during periods of financial or economic stress.