AN AFRICA CREDIT RATING AGENCY (AfCRA) KEY SHAPING THE NEW GLOBAL FINANCIAL ARCHITECTURE

African Credit Rating Agency.

African governments seek sovereign credit ratings (SCR) in order to access global capital markets in pursuit of their broader objectives, including fostering deeper local capital markets, raising capital for public infrastructure projects, attracting foreign direct investment, and supporting private sector access to global capital markets.

 

International investors in global capital markets prefer to invest in Africa through Eurobonds because of the perceived instability of local currencies in emerging markets. The need to raise funds through Eurobonds has invariably forced African governments to yield to stringent conditions set as best practices and minimum requirements for capital market borrowing by market regulators, in order to issue sovereign bonds.

 

Potential lenders of long-term international capital require borrowing countries to have a credit rating from at least one of the three dominant international CRAs, as evidence of adherence to best practices in terms of information disclosure, and to reach out to a wider base of potential investors. However, there is increasing dissatisfaction about the influence, approach, and methodology of the three international CRAs in assessing credit worthiness.

Read a brief of the urgency and significance of establishing the African Credit Rating Agency.