Whenever an African government borrows money abroad, credit ratings issued by a handful of agencies headquartered in New York and London determine what the government should pay. Those ratings determine which investors can buy a country’s bonds and at what price, and African leaders have long argued that those ratings unjustly penalize the continent. On October 7, a year later than planned, the African Union launched its answer: the Africa Credit Rating Agency (AfCRA), headquartered in Port Louis, Mauritius. Nigerian President Bola Tinubu has set the standard, saying that Africa wants ratings that are fair, not favourable. The first major test has already played out, however, and it suggests that fairness will be harder to define than the agency’s champions expect.
AfCRA is an African Union project delivered through the African Peer Review Mechanism. The agency will be private-sector led and fully owned by private investors, with no government shareholding. It will rate debt issued by governments, companies and municipalities, beginning with local-currency bonds, where African borrowers rely least on foreign agencies.
Credit ratings are opinions, but they are opinions with legal force. Since 1975, when the US Securities and Exchange Commission (SEC) began designating recognized agencies, ratings have been written into bank capital rules, central bank collateral frameworks and the mandates of pension and insurance funds. The International Monetary Fund (IMF) has described how these cliff effects turn a one-notch move at the investment-grade boundary into forced selling. Ratings also move prices independently of the fundamentals they summarize. For African borrowers, the stakes are larger still. A 2023 study by the United Nations Development Programme estimated that the African countries it examined could save up to US$74.5 billion in interest and foregone funding if ratings tracked economic fundamentals more closely and relied less on subjective judgment.
President Tinubu has identified the correct standard, but it may be harder to meet than it sounds. “Fair” implies either that the incumbent agencies have been getting a correct answer wrong, or that they have applied qualitative judgments unfairly. If either is true, meeting that standard may require a new agency and an entirely new approach altogether. The past 18 months offer a test case for understanding what fairness entails in this context. Six rating agencies examined the same African institution, the African Export-Import Bank (Afreximbank), and each returned different verdicts. Understanding the rationale behind their divergence illustrates the kind of issue AfCRA was set up to address.
Its delayed launch, however, may prove a blessing in disguise. Had AfCRA opened on schedule in June 2025, it would have arrived in the same month that Fitch cut Afreximbank’s credit rating, and any view it took on Afreximbank’s ratings would have looked like taking sides. Instead, the agency will launch with the whole episode behind it — and with a clear lesson in what it must get right.
Six Verdicts for One Bank
Afreximbank was founded by treaty in 1993, and it has 164 shareholders in four classes: African states and regional institutions, African private investors and banks, non-African institutions and an open class for any investor. It holds about US$40 billion in assets, reports a 24 percent capital ratio and states that roughly 86 percent of its loan book is secured. This shareholder classification is also the likely template, in miniature, for AfCRA: an African institution that mixes public purpose with private capital, and requests that markets treat it as something above a commercial lender. However, AfCRA appears set to push this model a little further by retaining the public mandate but leaving governments off its share register altogether. The agency would join a small family of African institutions built on the same hybrid logic, including the Trade and Development Bank and the Africa Finance Corporation. The issues is that none of them has successfully persuaded the market to price that hybrid status on its own terms.
Fitch downgraded Afreximbank’s credit rating in June 2025 from BBB to BBB-, and Moody’s followed in July that same year, from Baa1 to Baa2. Within weeks, the Japan Credit Rating Agency (JCR) affirmed an A- rating, South Africa’s Global Credit Ratings (GCR) affirmed an A rating, and the China Chengxin International Credit Rating (CCXI) affirmed an AAA rating. In January 2026, Afreximbank ended its contract with Fitch, which responded by cutting the bank to a BB+ rating (below investment grade) and withdrawing coverage. Then, in June 2026, S&P (the largest of the big three by market share) assigned a first-time rating of BBB+, three notches above Fitch’s final word. In barely a year, Afreximbank’s balance sheet had been rated everything from junk to single A. Figure 1 shows these ratings on a single ladder.
Figure 1: Afreximbank Ratings by Agency, January 2025 to October 2026 (Global-Scale Notches)
It is tempting to read this situation as Western agencies against everyone else, but the evidence does not support that view. The agencies worked from the same numbers, but they disagreed on how to treat Afreximbank’s loans to governments in default or those undergoing loan restructuring, chiefly Ghana, South Sudan and Zambia, even though the bank had no history of defaulting on its loans since its founding. The bank claimed a preferred creditor status, the convention under which lenders and development organizations such as the IMF and the World Bank/International Bank for Reconstruction and Development (IBRD) are repaid in full even when a government restructures its other debts. On that basis, Afreximbank counted those loans as performing and reported a non-performing loan ratio of 2.3 percent. Fitch rejected that claim, counted the same loans as non-performing and put the ratio at 7.1 percent. Fitch and Moody’s also marked the bank down for its operating environment. JCR, GCR and CCXI, by contrast, accepted the bank’s argument — and with it the lower non-performing loan estimate — and gave a higher weight to its collateral and repayment record. From Moody’s to CCXI, every agency works from a quantitative checklist, but the checklist is filled in by qualitative judgment calls.
Importantly, the preferred creditor status is a convention, not a legal right. The IMF and the World Bank/IBRD enjoy it because their borrowers and other creditors almost always honour their obligations. However, when Ghana defaulted in late 2022, it invited Afreximbank into the restructuring of a US$750 million facility. The bank refused. Similarly, Zambia listed its roughly US$45 million debt to Afreximbank as commercial debt, and its official creditor committee (co-chaired by China and France) insisted that the bank accept comparable treatment rather than preferred status.
The two cases then diverged. Ghana settled bilaterally in December 2025 on undisclosed terms. Zambia’s dispute hardened, with arbitration threats and a third-party offer to take over the debt. Fitch read the Ghana settlement as evidence that the bank had not honoured its preferred status. However, GCR read the same settlement as a reduction in sovereign risk and lifted its rating watch. The uncomfortable point for the sovereignty and Tinubu’s arguments for fair ratings levelled at foreign rating agencies is that whatever case Afreximbank had for preferred creditor status was weakened closer to home — by the conduct and default of its member states, who also happen to be the same governments now launching AfCRA.
Three Lessons for AfCRA
The friendlier ratings deserve some scrutiny, too. CCXI’s AAA rating appears to be on its Chinese domestic scale, where ratings run well above global equivalents; one Bank for International Settlements study found domestic agencies rate Chinese firms 6–7 notches higher than global agencies do. The Chinese agency’s rating is therefore not comparable with the other ratings. JCR’s A- rating is a different matter because the agency is registered with the SEC, and its opinion carries regulatory weight. GCR’s A rating is an international-scale rating, and the agency is owned by Moody’s, which rates the same bank Baa2 — three notches lower. Perhaps this could serve as a first lesson for AfCRA: to matter abroad, a rating must be on a common scale and accepted by regulators.
The second lesson is about the mandate of an independent rating agency. According to its own president, Afreximbank has invested about US$15 billion in a single Nigerian industrial group over the past decade — against the bank’s shareholders’ equity of US$8.4 billion. In April 2026, two months after losing investment grade at Fitch, Afreximbank anchored US$2.5 billion of a US$4 billion refinancing of the group’s oil refinery, which, at 650,000 barrels a day, is Africa’s largest. S&P cited the bank’s countercyclical strategic role when it assigned its rating. A more cautious analyst would see the same lending as riskier, with too much debt concentration on a single borrower. Both readings are defensible, but AfCRA will have to make this call in public, about African institutions — perhaps even under pressure by members to choose the flattering answer.
The third lesson concerns the parent institution, the African Union itself. Its financial institutions tend to stall between agreement and opening their doors. AfCRA’s private ownership spares it the hurdles that have stalled the African Union’s other financial institutions It may well work, but it also means the agency’s reputation will rest with investors who have not been named and capital that has not been disclosed.
The Test Still to Come
AfCRA is not the first challenge to the big three. Japan objected in 2022 when it was rated below Botswana, and Europe proposed its own agency after 2010 before abandoning the idea. Economic historians have found the agencies no better than the market at predicting the sovereign defaults of the 1930s. Meanwhile, the big three’s recent purchases of African agencies, GCR by Moody’s and a majority of Nigeria’s Agusto by S&P, suggest they think local knowledge and insights are worth paying for.
To build its reputation, AfCRA will need to publish its methodologies, create a board that African governments cannot pressure, and have the nerve to apply impartial judgment to any institution or corporation affiliated with a member state that it would apply to anyone else. The real test for AfCRA will come later, when it first has to downgrade one of the governments that championed its creation, when a borrower it rated as investment-grade first defaults, and when its rating first sits several notches from everyone else’s — with no published explanation as to why. Fair, not favourable, is the right standard. It is also a promise, and lasting trust and a strong reputation will depend on how it is kept.
