Africa’s first Sovereign Credit Rating Review Report launched

Addis Ababa, Ethiopia, October 29, 2020 (ECA) - The African Peer Review Mechanism (APRM), the Economic Commission for Africa (ECA), and the African Development Bank (AfDB) on Thursday virtually launched the first African Sovereign Credit Rating Review Report which assesses trends in the credit ratings of African countries during the first half of 2020.

The report examines the risk drivers that led to different downgrading in the face of the novel coronavirus (COVID-19); assesses their impact on the public debt servicing costs; examines the consistency, objectivity and transparency of the rating process; and makes recommendations to African countries on how to avoid negative rating actions and improve future ratings.

Many African countries have of late been complaining that credit rating agencies, which play a pivotal role within the international financial sphere, have been downgrading them unfairly. The member States are concerned by the impact of poor ratings by the three leading international credit rating agencies - Moody's, Standard & Poor's and Fitch.

The ECA says policies are needed to ensure Africa honours its debt obligations in a consistent, sustainable and transparent manner to avoid jeopardising credit ratings and adds this is the time to redefine a new financial architecture to deepen Africa’s financial markets in a way that is consistent with Agenda 2063 and Agenda 2030.

The two organisations argue that while the issue of ratings is real, there’s also an urgent need for African nations to be transparent in the contracts they enter into to avoid negative ratings. 

The ECA remains committed to continuing to work with the APRM, the African Union Commission and others on the issue of credit ratings and helping to redefine a new financial architecture for Africa. The APRM is a specialized entity of the African Union.

Those who spoke during the launch of the report, including ECA, APRM, IMF, African Union Commission representatives, praised the report which they said will help policy makers in Africa to engage more effectively in the rating processes by setting up diversely skilled liaison teams of experts to engage rating agencies during rating reviews; and develop and strengthen legislative frameworks for rating agencies to be registered in their jurisdiction to offer rating services, among others.

The African Sovereign Credit Rating Review Report aims to provide African countries and investors with relevant analysis of the opinions issued by international agencies on sovereign credits. The report presents trends, determining factors, interpretation of opinions and policy recommendations on sovereign credit ratings.

Eleven countries were downgraded at the height of COVID-19. These are Angola (twice), Botswana, Cameroon, Cape Verde, Ethiopia, Gabon, Nigeria (twice), Seychelles, Tunisia, South Africa (3 times) and Zambia (3 times). Twelve countries had negative change in their sovereign rating outlook, indicating risk of being downgraded in short-to-medium term.

Issued by:

Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Tel: +251 11 551 5826