African Union launches Africa Credit Rating Agency

The African Union launched the Africa Credit Rating Agency (AfCRA) in Port Louis, Mauritius, on Wednesday, October 7, presenting it as an alternative source of assessments for governments, financial institutions and businesses. The agency is intended to give investors additional context about African credit risks, but its influence on investment decisions and borrowing costs remains unproven. The launch follows years of work on the initiative, which African leaders endorsed in 2018. The African Union says AfCRA will operate independently and assess sovereign and corporate borrowers as well as financial institutions. Officials have also described broader coverage as a goal, including economies that lack ratings from major international agencies. The African Peer Review Mechanism says 23 African economies are unrated by the three largest agencies. The initiative comes amid longstanding complaints from African leaders that international ratings do not adequately account for the continent’s economic conditions and can contribute to high borrowing costs. The three major agencies have rejected claims of systemic bias, saying they use the same methodologies globally.