José de Lima Massano, Angola’s Minister of State for Economic Coordination, told the Financial Times Africa Summit in London on 21 and 22 October about a frustration every finance minister on the continent knows: a country that keeps honouring its debts, on time and in full, still pays a premium to borrow. That gap between how African governments behave and how their risk is priced carries a real cost for ordinary people, and it is the arithmetic behind a new institution launched this month.
On 7 October, at a ceremony in Port Louis, the African Union publicly inaugurated the Africa Credit Rating Agency, AfCRA. For as long as African states have borrowed on international markets, a handful of analysts sitting thousands of kilometres away have had an outsized say in what that money costs. The AU has moved past demanding a seat at the table. It has built its own.
The grievance against the incumbents is old. African leaders have long accused the big three ratings agencies, Moody’s, Fitch and S&P, of overstating African risk and downgrading too quickly during a crisis. A 2024 Reuters investigation, however, found no evidence of systemic bias in their sovereign ratings for the region. What is not in dispute is the bill. The continent’s annual external debt service climbed from $61 billion in 2010 to $163 billion in 2024, and in some countries interest payments now exceed national health and education budgets. For families who rely on clinics and classrooms, that is the direct trade-off. The UN Development Programme estimates that fairer rating methodologies could unlock savings of up to $5 billion a year, or as much as $75 billion for African borrowers over time. Those numbers may not directly substantiate the long-standing grievance, but they lend weight to the case for exploring alternative ways of measuring African creditworthiness.
The stakes for people behind those budgets are concrete. Every basis point of perceived extra risk is money not spent on clinics or classrooms. And for borrowers who have simply never made it onto the scoreboard, the gap is starker still: the AU notes that 23 African economies currently have no rating from the big three at all. AfCRA will rate sovereigns, financial institutions and private companies, and it is positioned as a complement to rather than a rival of the incumbent agencies. Its backers see a new, Africa-grounded benchmark for pricing bonds and loans, a fresh comparator in acquisition and project financing, and, for the unrated, coverage for the first time.
Meanwhile, the launch fits a broader pattern in the continent’s credit markets. African private debt deal values grew 14% year on year even as other asset classes declined, and local institutional investors are increasingly looking to plug a lending gap that traditional banks, constrained by capital requirements, cannot fill. Private credit funds are emerging as a channel connecting institutional investors with businesses and infrastructure projects underserved by traditional lenders. AfCRA is best understood as the sovereign-level counterpart to that story: another sign that African capital and debt markets are maturing and demanding institutions built for African conditions rather than retrofitted from elsewhere. The recurring proposition is that Africa does not simply need more capital; it needs stronger financial institutions and credible mechanisms to channel its substantial domestic savings into productive investment. By improving credit information, strengthening risk assessment and helping investors distinguish between perceived and actual credit risk, AfCRA could become another important part of that ecosystem.
What remains unresolved, though, is trust. A rating agency is only as useful as the confidence investors place in it, and confidence is precisely what AfCRA does not yet have. “The first hurdle will be inevitably credibility, because a new rating agency begins with a promise while investors ultimately require a track record,” Dennis Shen of the International School of Management in Berlin told Bloomberg. Economist Daouda Sembène has made the same point more bluntly: for AfCRA to matter, it must be independent of the AU and its member states; it cannot merely be African in name.
Mauritius was chosen as AfCRA’s home, no doubt because of its well-established and credible financial markets and related infrastructure. But the 7 October ceremony was a public inauguration, not an opening for business. AfCRA still has to be registered and licensed by the Mauritius Financial Services Commission, finalise its as-yet-unannounced corporate structure and issue its first rating before it can operate as a going concern. Discussions at the Africa Summit strongly suggested a growing determination across the continent to shape how African economies are assessed and how investment risk is understood.
AfCRA will not move the price of a single bond tomorrow. Its significance may ultimately lie in something broader: helping to build the financial infrastructure through which African risk is better understood, capital is more confidently deployed and African savings flow into productive investment. Alongside the growth of private credit, deeper local capital markets and stronger institutional investment frameworks, it represents another step towards a continent that does not merely attract capital from elsewhere but increasingly mobilises, deploys and recycles its own. Whether that promise reaches the citizens it is meant to serve, in the form of money freed up for schools and clinics, will depend on whether AfCRA earns the confidence of the investors whose capital decisions it seeks to influence.
Michael Denenga, partner, and Sabelo Ndlovu, associate at Webber Wentzel. The views expressed do not necessarily reflect the views of the National Media Group.