With Africa requiring an additional $1.3 trillion per year to make meaningful progress toward the Sustainable Development Goals, the need for innovative financing strategies and improved access to international capital markets to finance development is more critical than ever.
Recent downgrades of African countries by the Big Three credit rating agencies—Moody’s, S&P, and Fitch Ratings—have highlighted the urgent need for many African countries to address their fiscal challenges and secure development financing.
The initiative’s main goals are to increase capacity and provide useful information and training through a resource platform, advisory services, and a platform for interacting with policymakers in the credit ratings industry.
In his opening remarks, UNDP Ethiopia’s resident representative Samuel Doe emphasized how crucial it is to comprehend credit rating procedures and how they affect development financing in order to meet sustainable development objectives. “Credit ratings are important because they can improve a nation’s standing in the international arena. An increased cost of capital resulting from a lower credit rating allocates more funds toward debt servicing and less into priority sectors. Many African countries must make difficult decisions between paying off debt and making investments in the future.
The chief executive officer of the research tank AfriCatalyst, Daouda Sembene, stressed in his presentation the importance of collaboration between policymakers and credit rating organizations in navigating credit ratings in order to achieve sustainable development.
“We believe that this workshop will serve as the catalyst for the beginning of fruitful and significant partnerships, information exchanges, and peer education among local government officials. In order to help African nations accelerate their progress toward the Sustainable Development Goals, especially in critical areas like infrastructure, health, education, and climate resilience, we must work together to better support their access to adequate and cheap funding.”
Shigeki Komatsubura, the UNDP Tanzania resident representative, praised the initiative and urged African nations to take advantage of the chance to learn about credit rating systems. With the aid of UNDP’s groundbreaking Africa credit rating program, “let us take full advantage of this opportunity to begin restoring our collective credit strengths to where we started in the early 2000s,” he said.
“With only 2 African nations currently holding investment-grade ratings, it’s clear that the sovereign debt burden is a critical challenge,” said Zuzana Brixiova Schwidrowski, Director of Macroeconomics, Finance, and Governance at the United Nations Economic Commission for Africa (UNECA), emphasizing the vital importance of this initiative.
In partnership with UNDP, UNECA is dedicated to assisting African nations in capitalizing on this momentum, establishing robust institutions, and launching a fresh wave of improved credit ratings and sustainable development.
The first session of the day focused on credit ratings and the development context of Africa and was chaired by Raymond Gilpin, Chief Economist at the UNDP Regional Bureau for Africa. Credit ratings must be seen as a problem with development funding.
Working with experts will help us obtain better data, understand the appropriate institutional and policy frameworks, and discover the most effective ways to bargain with credit rating agencies.” A high-level policy discussion will take place on September 4 at the UNDP Regional Service Center for Africa in Addis Ababa to wrap up the workshop.
An open discussion on the strategic and policy implications of sovereign credit ratings and their impact on Africa’s development financing landscape will be held at an event titled “A Continent in Conversation: Alternative Strategies to Improving Africa’s Credit Ratings,” which will bring together prominent policymakers, government officials, and experts from throughout the continent.
Beginning with a workshop on capacity-building held in Tanzania in July 2024, the UNDP-AfriCatalyst credit ratings effort has been enhancing the ability of government officials in African nations since its founding.
Since its establishment, the UNDP-AfriCatalyst credit ratings initiative has been strengthening the capacity of government officials in African countries, beginning with a capacity-building workshop held in Tanzania in July 2024.
The main components of the initiative include the Africa Credit Ratings Resource Platform, a central hub for resources and tools on credit ratings; a Concilium of senior advisors to provide high-level guidance and support to countries seeking to improve their credit ratings; and a community of practice for knowledge sharing collaboration between government officials and other stakeholders.
