African governments are backing a new continental credit rating agency aimed at improving how African economies and borrowers are assessed by financial markets, amid longstanding concerns that international ratings underestimate the continent’s creditworthiness.
The Africa Credit Rating Agency (AfCRA) is set to launch under the auspices of the African Union, following nearly a decade of efforts by African policymakers to establish an institution that better reflects the continent’s economic realities.
The initiative challenges the dominance of Moody’s, S&P Global and Fitch Ratings, whose assessments influence how much governments and companies pay to borrow from international markets.
African policymakers have argued that the methodologies used by the three agencies do not always adequately account for factors such as large informal economies, limited data and country-specific economic conditions. They say this can contribute to an “Africa premium”, with African borrowers facing higher financing costs.
A 2023 report by the United Nations Development Program estimated that shortcomings in global credit rating methodologies cost African countries about $74.5 billion through higher interest payments and borrowing opportunities lost, based on outstanding government debt at the time.
However, AfCRA’s impact will depend on whether investors regard its assessments as independent, transparent and reliable.
The new agency is expected to look beyond foreign-currency government bonds, a relatively small segment of Africa’s debt market, and pay greater attention to local-currency borrowing and corporate debt.
This could help address a gap in the continent’s financial markets, where many companies and other borrowers have no formal credit ratings, limiting investors’ ability to assess their risks.
According to the African Union, Africa has an estimated $4 trillion in domestic capital, but less than a quarter is covered by credit ratings. At the end of 2025, the continent had fewer than 4,000 ratings, compared with 823,000 in the European Union and more than two million in the United States.
Misheck Mutize, one of AfCRA’s architects and its lead expert on credit ratings, has argued that the agency should help expand African capital markets and direct more financing towards productive sectors, including infrastructure, energy and manufacturing.
A deeper ratings market could also give pension funds, insurers, banks and other domestic investors more information to assess investment opportunities beyond short-term government securities.
AfCRA enters a market in which global rating agencies already have an established presence, while several African agencies have struggled to remain independent or have been acquired by international competitors.
Moody’s acquired South Africa-based Global Credit Rating (GCR) in 2024, while S&P Global took a majority stake in Nigeria’s Agusto & Co earlier in 2026, according to the information provided ahead of AfCRA’s launch.
The debate over whether global ratings adequately reflect African conditions came into sharp focus in 2022, when Ghana criticized Moody’s after the agency downgraded the country’s credit rating from B3 to Caa1, indicating a substantially higher risk of default.
Ghana’s finance ministry accused the agency of institutional bias and argued that its assessment had overlooked important information about the country’s fiscal adjustment efforts. Moody’s defended its rating. Ghana defaulted on much of its external debt the following year.
The episode illustrates the challenge facing AfCRA: improving the use of local information while maintaining rigorous assessments of borrowers’ ability to repay their debts.
Torsten Schmidt, an economist at Germany’s Leibniz Institute for Economic Research who has studied sovereign credit ratings, has estimated that bias results in African countries receiving ratings about one notch lower on average than they otherwise would.
But he has also warned that AfCRA will need to demonstrate that any differences between its ratings and those of established agencies reflect stronger analysis rather than a more favorable view of African borrowers.
International investors are likely to scrutinize the agency’s methodology, governance and independence before relying on its assessments when making investment decisions.
The experience of China’s Dagong Global Credit Rating, which sought to challenge the established agencies internationally in 2010 but struggled to gain recognition from US regulators, highlights the difficulty of building credibility in a market dominated by long-established institutions.
The African Union has said AfCRA will not be owned by governments, a measure intended to limit political interference. Details of its leadership, funding, shareholders and operational arrangements had not been disclosed ahead of its launch in Mauritius.
A Moody’s spokesperson welcomed initiatives that support the development of African capital markets and improve understanding of credit risk across the continent.
The AfCRA task will be to turn longstanding criticism of international ratings into an alternative that borrowers and investors can trust. Its success could help broaden access to finance across Africa, but that will depend on the quality of its analysis and the confidence it earns in global markets.
