BY CHIKA OKEKE, Abuja
Determined to strengthen financial inclusion, the African Export-Import Bank (Afreximbank) has unveiled the Africa Credit Rating Agency (AfCRA), designed to expand the continent’s capacity to generate credible and independent analysis of African credit risk.
Credit ratings play an important role in determining access to capital, influencing investor perceptions and shaping the cost at which the governments, institutions and businesses can finance development.
Senior Executive Vice President of Afreximbank, Mr Denys Denya said that the assessments of African credit risk are independent, rigorous and evidence-based, while reflecting a complete understanding of the structures, institutions and economic realities being assessed.
The establishment of AfCRA adds an important African-led source of credit opinion to the market, as its value will not be measured by whether it produces more favourable ratings, but by the credibility of its analysis, the quality of its data and transparency of its methodology, and its ability to deepen understanding of African sovereigns, sub-sovereigns and corporate credit.
Denya said: “This is particularly important given that many African issuers remain unrated, while local-currency and sub-sovereign markets continue to have limited rating coverage. Expanding credible rating coverage can improve the information available to investors and support the development of deeper domestic and regional capital markets.”
Alongside fellow members of the Alliance of African Multilateral Financial Institutions (AAMFI), Afreximbank has consistently maintained that African Multilateral Financial Institutions should be assessed on the basis of their fundamentals, performance, legal frameworks, mandates and operating models.
On the uniqueness of the African market, and need for AfCRA’s rating methodology, Denya stated that the rating methodology must recognise the uniqueness of the environment and its institutional structures. The agency must set its own standards and not follow those set elsewhere — it must build a unique identity that conforms to an ‘African best practice.”
Denya informed that AfCRA must set a new benchmark for the continent, maintain its independence, and remain wholly owned and controlled by Africans.
AfCRA should be seen as complementary to existing international and regional rating agencies, broadening the range of credible analysis available to investors and issuers while strengthening competition, transparency and analytical capacity within Africa’s credit markets.
As Africa seeks to mobilise the scale of capital required for industrialisation, trade, infrastructure and economic transformation, credible African institutions that improve information, strengthen market confidence and deepen the continent’s financial markets will become increasingly important.
Afreximbank congratulated the African Union, the African Peer Review Mechanism (APRM) and all partners involved in implementing the AfCRA, promising to forward more contributions to the Agency to make it deeper, more transparent and more efficient African capital markets.
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