After decades spent arguing that the Wall Street credit rating agencies evaluating its debt do not always understand the region, African governments have finally put an institution behind their complaint.
The Africa Credit Rating Agency (AfCRA) will launch on Wednesday under the auspices of the African Union, the culmination of a decade of lobbying by governments and policymakers who say the dominance of the “big three” rating agencies — Moody’s, S&P Global and Fitch Ratings — has led to an unjustified “Africa premium”.
With nine rating agencies already operating across Africa — compared with 10 in the US and 29 in the EU — the launch is of great political significance, analysts say, even if its commercial prospects are uncertain.
“AfCRA is not simply another rating agency,” Misheck Mutize, one of its architects and its lead expert on credit ratings, wrote this week.
Rather than competing with the century-old big three, the institution would be “a new lever for expanding and deepening Africa’s capital markets . . . and helping redirect capital towards productive investment in infrastructure, energy and manufacturing”.
No details of AfCRA’s leadership, finances, shareholders or operational plans have been disclosed before Wednesday’s launch at an evening ceremony in Port Louis, Mauritius, where it received a financial services licence at the end of last month, according to a regulatory filing.
But the African Union has said the agency will have no government ownership, to avoid political conflicts. Given the few commercial opportunities in rating the small amount of foreign currency bonds issued by African governments, investors expect it to focus on the relatively neglected business of rating local currency sovereign and corporate debt on the continent.
AfCRA is part of a broader African push for greater control over the institutions that determine how the continent is perceived — and financed — by global markets.
Finance officials have often argued that ratings from established agencies rely on crude, lagging metrics that overstate the likelihood of default. A 2023 UN Development Programme report found that global methodologies often fail to capture local conditions — such as informal markets and data limitations — and that the resulting ratings “idiosyncrasies” cost the continent an estimated $74.5bn in excess interest payments and foregone borrowing, based on African governments’ outstanding foreign and local currency debts at the time.
Africa had a large pool of domestic capital, Mutize noted, but too much of it remained parked in short-term securities, such as 90-day government bills, which “cannot generate nor sustain economic growth”.
The region’s domestic debt markets are expanding rapidly and many non-government issuers remain unrated. Of an estimated $4tn regional capital base, less than a quarter is covered by credit ratings, according to the African Union. At the end of 2025, it said, the continent had fewer than 4,000 ratings, compared with 823,000 in the EU and more than 2mn in the US.
AfCRA faces substantial competition. Domestically focused African rating agencies have emerged in recent years, many of which have been swallowed up by the global big three. Moody’s bought South Africa-based GCR in 2024, for example, while S&P Global took a majority stake in Nigeria’s Agusto & Co earlier this year.
The debate over local knowledge and ratings accuracy reached a flashpoint in 2022 when Ghana’s government furiously clashed with Moody’s after the agency downgraded the west African country deeper into junk, from a B3 rating denoting its bonds as highly speculative to a Caa1 rating indicating a substantial risk of default.
Ghana’s finance ministry accused Moody’s of “institutionalised bias”, saying that its lead analyst had not visited the country and had overlooked crucial data on fiscal consolidation. The agency stood by its rating; Ghana defaulted on much of its external debt the following year.
Despite such incidents, Torsten Schmidt, an economist at Germany’s Leibniz Institute for Economic Research who has studied sovereign rating bias, estimates that on average African sovereigns are rated about one notch lower as a result of such bias than would otherwise be the case.
“That’s something, but most of the countries are rated far below investment grade,” he said.
“The most important aim of this new agency is to improve the information content of ratings,” he added, by collecting “more and better information” about conditions in African countries.
Still, he warned, the credibility test would be formidable — if AfCRA produced ratings materially different from those of Moody’s, S&P Global or Fitch, international investors would ask whether it was simply “an African agency” being less critical of African borrowers, Schmidt said.
The precedent is mixed. China’s Dagong Global Credit Rating launched a high-profile international push in 2010 to challenge the big three’s dominance but lost international credibility after failing to win regulatory recognition from the US Securities and Exchange Commission.
A spokesperson for Moody’s said the agency welcomed “initiatives that support the continued development of Africa’s capital markets and broader understanding of credit risk across the continent”.