Africa will no longer accept the unfairness of global credit rating agencies because they rely on outdated assumptions and systemic bias, President William Ruto has said.
The President said the agencies have painted an unfair picture of African economies, leading to distorted ratings, exaggerated risks, and unjustifiably high borrowing costs.
Instead, he rallied support for the establishment of the Africa Credit Rating Agency.
He said the agency, backed by credible data, would accurately reflect Africa’s reality and consequently unlock much-needed finance to fund the continent’s development programmes.
“It is time for Africa to use the right scale, one that reflects its true weight. The Africa Credit Rating Agency will do just that,” he said.
“The foundations of global finance are supposed to be anchored on the principles of fairness, transparency, and merit. Yet, these principles are disregarded when it comes to Africa,” he pointed out.
President Ruto made the remarks during a High-Level Presidential Breakfast Dialogue on the Establishment of the Africa Credit Rating Agency on the sidelines of the 38th Ordinary Session of the Assembly of the Heads of State and Government of the African Union in Addis Ababa, Ethiopia.
Others who spoke were Presidents Taye Atske Selassie (Ethiopia), Hakainde Hichilema (Zambia) and Abdelmadjid Tebboune (Algeria).
The President emphasised that the Africa credit agency will complement international credit rating agencies by filling data and analytical gaps.
“It will do the heavy lifting that international rating agencies may lack the time, inclination or capacity to undertake,” he said.
The President said a fair and accurate credit rating system has the potential to improve African nations’ credit rating.
He noted that research has shown that a one-level improvement in Africa’s average credit rating would unlock $15.5 billion in additional funding.
“This alone would outstrip Official Development Assistance by 12% and meet 80% of Africa’s infrastructure needs. The opportunity is within our grasp, and we must seize it,” he said.
Additionally, the President said the Africa Peer Review Mechanism and the United Nations Development Programme place the cost of biased credit ratings at a staggering $75 billion in lost opportunities.
“In a continent abundant with natural wealth, vast arable land, billions in diaspora remittances, and the world’s largest carbon sinks, credit rating agencies have delivered 94% of all downgrades in African countries in the past decade, arbitrarily designating only two African nations as investment grade,” he said.
The President commended UNDP and AfriCatalyst for stepping forward to support African nations in strengthening their creditworthiness.
“This is the kind of partnership we need – one rooted in action, not empty rhetoric,” he said.
President Hichilema said it was time for Africa to take bold action to address the bias in the international financial architecture.
“It is now time we walk the talk on the implementation of the Africa credit rating. We have talked enough,” he said.
President Selassie said the lack of a fair credit rating agency has slowed down development in Africa.
African Union Commission Deputy Chairperson Monique Nsanzabaganwa called on Africa to take charge of its destiny rather than rely on global agencies that have been biased, leading to expensive loans.
She said it was time Africa stopped being judged by external perceptions, but by internal realities.
