What an African credit rating agency could mean for the continent
Kenyan President William Ruto has renewed calls for the creation of an African credit rating agency, arguing that global systems unfairly penalise African countries and drive up borrowing costs.
Speaking at the Tokyo International Conference on African Development (TICAD) in Yokohama, Ruto said reforms are needed to unlock affordable and sustainable financing for development. Adding that international ratings often overlook local economic realities and treat Africa as riskier than it is.
“The current global credit rating system often overlooks Africa's unique economic realities, unfairly penalising our countries during periods of global distress. This must change,” Ruto said. “I therefore support the proposal to establish an African credit rating agency, complemented by reforms in global credit rating systems to address structural inequalities,” he added.
While Ruto stressed the importance of deepening regional integration through the African Continental Free Trade Area (AfCFTA), he also called for sweeping reforms to the international financial system and urged African nations to boost trade with each other. He said the continent could no longer afford to be held back by external dependence and unfair credit ratings.
“Intra-African trade accounts for only 15 percent of total continental trade. By all credible estimates under AfCFTA, intra-African trade can surge by up to 50 percent in just ten years,” he said. “This would generate immense wealth, create millions of decent jobs, expand opportunities for MSMEs, and open new markets for African goods and services.”
Currently, intra-African trade accounts for only 16 percent of the continent’s total, compared with 70 percent in Europe and 60 percent in Asia. The disparity highlights Africa’s continued reliance on external markets for growth, Viory reports.
Why ratings matter
Credit rating agencies such as Moody’s, Fitch and S&P Global assess amongst others, a country’s ability to repay debt. Their ratings heavily influence how much governments and businesses pay when they borrow money.
For African countries, a downgrade can mean significantly higher interest rates on loans, even when economic fundamentals remain stable. Leaders argue this creates a cycle where debt becomes harder to manage, limiting resources for investment in infrastructure, healthcare, and education.
This story is written and edited by the Global South World team, you can contact us here.
