Establishing Africa’s Credit Rating Agency crucial for economic progress, says ECA Chief

Addis Ababa, September 22, 2024 (FBC) – The establishment of an Africa Credit Rating Agency (CRA) is essential for the continent’s economic advancement, the Executive secretary of United Nations Economic Commission for Africa (UNECA), Claver Gatete underscored  during a high-level dialogue on the establishment of an African credit rating agency in New York.

Addressing delegates, Gatete emphasized the challenges African nations face due to low credit ratings from major international agencies.

ENA quoted him as saying, “Africa is underserved by major international rating agencies.”

“Yet chronically low ratings from the three international rating agencies, S&P Global Ratings (S&P), Moody’s, and Fitch Group, continue to underserve Africa,” he remarked.

“Africa faces a massive debt challenge, with the continent expected to pay USD163 billion in 2024 just in interest. Multiple downgrades from already low levels have exacerbated Africa’s current fiscal challenges.”

The fiscal space has been put under pressure by rising borrowing costs, reduced investor confidence, triggered capital flight and aggravated risk perceptions, he noted, stating that credit rating downgrades have been a major contributor to these factors.

Gatete underscored the urgency of reforming the global financial architecture, stating that an Africa CRA would “offer a strategic opportunity to complement existing global agencies” and provide an “African-centered perspective.”

The UN Economic Commission for Africa is actively working with partners to support this initiative through reports and technical assistance.

“We are developing national capacities through e-learning trainings and targeted technical assistance,” Gatete added.

In conclusion, he called for robust dialogue and partnerships to ensure the CRA’s success, affirming that this initiative will enhance Africa’s credit ratings and contribute to financial market development.