African Union launches AfCRA to offer Africa-focused credit ratings

The African Union has formally launched the African Credit Rating Agency, AfCRA, as a new institution designed to assess the credit risks of African governments and businesses from a perspective more closely aligned with the continent's economic conditions. The agency was unveiled in Port Louis, Mauritius, on Wednesday, several years after the African Union approved plans for its creation.

AfCRA is expected to provide an alternative perspective alongside assessments produced by established international agencies including Fitch Ratings, Moody's Ratings and S&P Global Ratings. African policymakers have argued for years that some existing risk assessments do not adequately reflect the continent's economic realities, contributing to expensive borrowing and reducing access to affordable financing. Uganda's Minister of State for Finance, Planning and Economic Development, Amos Lugoloobi, who represented President Yoweri Museveni at the launch, said the central problem facing African economies was their difficulty in mobilising sufficient resources at affordable rates rather than a lack of economic potential.

African Union Commission Chairperson Mahmoud Ali Youssouf said maintaining AfCRA's independence would be essential to establishing confidence in its assessments. The agency emerged from an African Union initiative but is not expected to be owned by African governments. This structure is intended to limit political influence over its work and strengthen the credibility of the ratings it produces.

Marie-Antoinette Rose Quatre, Chief Executive Officer of the African Peer Review Mechanism, said the purpose of AfCRA goes beyond competing with international rating companies. She said the agency was established to produce independent and impartial assessments that better reflect conditions within African economies. Its mandate covers sovereign governments, sub-sovereign entities and corporate issuers, potentially extending credit assessments to governments and companies that currently do not have ratings.

The agency is also expected to pay particular attention to debt issued in local currencies. This area could become increasingly relevant as African governments and businesses seek to expand domestic capital markets and reduce dependence on external financing. AfCRA's broader approach is intended to give investors another source of information when evaluating credit risk across the continent.

Afreximbank Senior Executive Vice-President Denys Denya, representing the bank's President and Chairman George Elombi, also raised the issue of how sovereign ratings can affect African companies operating across multiple countries. He argued that the financial position of a company with operations in several jurisdictions may not always be accurately represented by the rating of the country where it is headquartered. Denya said AfCRA should establish a stronger benchmark for evaluating African risk while preserving both its independence and African ownership.