The African Union has launched the Africa Credit Rating Agency, AfCRA, the continent’s first pan African credit rating institution, in a move aimed at improving how African economies are assessed and potentially lowering borrowing costs.
The agency was officially launched in Port Louis, Mauritius, on Wednesday after African leaders endorsed its creation in 2018. It is mandated to provide independent, Africa focused assessments of the creditworthiness of sovereign governments, subnational entities, financial institutions and companies.
AfCRA is intended to provide an additional perspective to established international agencies including Moody’s, S&P Global and Fitch. African governments and policymakers have long argued that conventional rating methodologies do not adequately reflect local economic conditions, potentially contributing to higher risk premiums and more expensive access to international capital.
The major rating agencies have rejected accusations of systemic bias, saying they apply their methodologies consistently across countries. A 2024 Reuters investigation also found no evidence of systemic bias in the sovereign ratings assigned to African countries by the three major agencies.
Borrowing costs at the centre
The AU said credit ratings directly influence the cost and availability of capital, making the credibility of the new institution particularly important for African countries facing high debt servicing obligations.
Africa’s annual external debt service rose to $163 billion in 2024, compared with $61 billion in 2010, according to the AU. In some countries, debt servicing costs have exceeded annual public spending on key sectors such as health and education.
The AU said AfCRA would seek to close information gaps by incorporating African data, expertise and economic realities into credit assessments. It also aims to expand coverage, with 23 African economies currently lacking ratings from the three major global agencies.
AfCRA is expected to focus particularly on local currency sovereign and corporate debt, an area that remains relatively underdeveloped in international credit rating coverage. The institution could therefore provide ratings for African governments and businesses seeking to deepen domestic capital markets and attract institutional investors.
Independence key to credibility
Although the agency was created under an African Union mandate, the AU said AfCRA would operate independently and would not be owned by governments. Its funding will come from shareholder capital and revenue generated through its operations.
AU Commission Chairperson Mahmoud Ali Youssouf said the agency was not intended to shield African borrowers from scrutiny or guarantee favourable ratings.
He stressed that AfCRA’s credibility would depend on independence, professionalism, transparency and adherence to internationally recognised standards. Its assessments, he said, must be evidence based and free from political considerations and conflicts of interest.
Afreximbank Executive Vice President Denys Denya said the agency could help address information gaps that contribute to uncertainty among investors. He argued that when investors lack sufficient information about a market, they tend to demand higher compensation for perceived risks.
A test for Africa’s financial architecture
The launch comes as African governments seek greater control over the continent’s financial architecture and more efficient mobilisation of domestic and international capital.
The African Union says AfCRA will complement rather than replace existing global rating agencies by providing an additional, independent assessment of African credit risk. Its success, however, will depend on whether investors and financial institutions regard its ratings as sufficiently independent, accurate and consistent to influence investment decisions.
Analysts have warned that the institution will face a significant credibility test, particularly during financial crises when rating agencies are expected to make difficult assessments that may be unpopular with governments or companies.
The new agency therefore represents more than an effort to create an African alternative to the global rating firms. Its longer term significance will depend on whether it can improve the quality of information available to investors, strengthen African capital markets and help ensure that credit assessments more accurately reflect the economic fundamentals of countries and businesses across the continent.
If successful, AfCRA could contribute to improved access to financing for infrastructure, energy, manufacturing, health and education, while giving African borrowers another platform through which their creditworthiness can be assessed in global financial markets.
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