African countries are not seeking favourable sovereign credit ratings but assessments that fairly reflect the continent’s economic fundamentals and ongoing reforms, President Bola Ahmed Tinubu declared yesterday.
The President, who welcomed the African Union’s announcement of the October 7 official launch of the African Credit Rating Agency (AfCRA), said the new institution must demonstrate independence and rigour to earn the confidence of global investors.
Tinubu stated this in a post on his verified X handle, @officialABAT. He described the establishment of AfCRA as another important step towards building African financial institutions capable of properly understanding and assessing the continent’s economies.
‘Africa is not asking for favourable ratings. We are asking for fair ratings, grounded in our fundamentals and in the reforms our economies are actually carrying out,’ the President said.
Tinubu, however, cautioned that the creation of an African-owned rating agency would not automatically guarantee its credibility, saying AfCRA would have to establish its reputation through the quality and independence of its assessments.
‘AfCRA must now earn the confidence of global capital. That confidence will rest on its independence and the rigour of its work,’ he said.
The President recalled that he had repeatedly canvassed the establishment of an African credit rating agency, including in an article published in the Financial Times in February.
He said he renewed the call in May at the Africa CEO Forum in Kigali, Rwanda, where he argued that the continent needed to build financial institutions with a better understanding of African economies and their peculiar risk profiles.
‘In February, I made the case in the Financial Times for an African credit rating agency. In May, at the Africa CEO Forum in Kigali, I spoke again about the need for Africa to build financial institutions that understand our economies and can assess our risks properly.
‘AfCRA is another step towards that goal,’ Tinubu said.
The proposed agency is expected to provide an African perspective in the assessment of sovereign and other credit risks on the continent, amid longstanding concerns among African leaders over what they consider deficiencies in the methodologies and risk perceptions of existing international rating agencies.
Tinubu has been among African leaders advocating reforms to the global financial architecture, arguing that inaccurate perceptions of risk raise borrowing costs for African governments and businesses and constrain the continent’s access to capital needed for infrastructure and development.
His latest remarks, however, underscored the position that AfCRA should not serve as a vehicle for artificially improving African countries’ ratings, but should establish credibility through objective assessments backed by sound methodology and evidence.
The President expressed optimism about the agency’s commencement of operations, saying ‘I look forward to October 7.’