AU launches continent’s first credit rating agency

The African Union has launched the continent’s first credit rating agency, seeking to provide an alternative to the ‘big three’ global ratings agencies as debt burdens weigh on many ‌African economies, reports SABC News. The Africa Credit Rating Agency (AfCRA) –  the creation of which African leaders endorsed in 2018 – was launched at a ceremony attended by African officials in Port Louis, the capital of Mauritius, where it will be based. The new agency will help investors to assess Africa’s investment risk better by offering investors more information and context, said ​Denys Denya, executive vice-president of Afreximbank, one of the backers of the agency. ‘When lenders don’t see clearly, they charge for ​the fog. Africa continues to pay for the fog that is generated by Western-centric examinations,’ he told ⁠the launch ceremony. African leaders have long accused Western ratings agencies, including S&P, Moody’s and Fitch of failing to fairly assess the risk of lending to ​African countries and of moving too quickly to downgrade them during crises such as conflicts and pandemics. The agencies reject that criticism, saying they apply the ​same methodologies globally. Rating experts said the success of the initiative will hinge on the perceived credibility of the new agency, especially in ​times of crisis, AfCRA may provide a counterweight to established rating agencies, but it must meet global standards, former Nigerian Vice-President Yemi Osinbajo said. AfCRA, which will rate sovereign borrowers, financial institutions and private companies, will operate independently and be funded through shareholder capital and ​its operations, the AU said. It ​did not provide details about ⁠the shareholders.