The African Union (AU) has announced the creation of its own Africa Credit Rating Agency (AfCRA), headquartered in Mauritius, to address what it sees as unfair bias by the Big Three credit rating agencies—Standard and Poor's (S&P), Moody's, and Fitch—against African sovereigns. The AU and other African voices argue that these biases result in lower ratings, higher borrowing costs, and slower development. Marie-Antoinette Rose-Quatre, CEO of the AU African Peer Review Mechanism, stated in September 2024: “Africa is no longer content to be a passive observer in this discourse. We are taking ownership of our narrative and driving forward meaningful, homegrown solutions.”
The Bias Debate: Evidence and Counterarguments
In 2025, only Botswana, Morocco, and Mauritius held investment-grade status from the Big Three, while South Africa, Côte d'Ivoire, and Benin were rated just below investment grade. The remaining 49 African countries were rated well below, and several remain unrated, excluding them from capital market access. However, the Big Three insist they apply the same criteria globally, including economic, institutional, and governance strength, as well as monetary policy effectiveness. An April 2025 report by the Konrad-Adenauer-Stiftung (KAS) and the Leibniz Institute for Economic Research found that while some measures like GDP and debt ratios are objective, others like institutional strength are subjective, allowing for bias. The report noted that the Big Three's emphasis on GDP per capita effectively punishes poorer countries: in 2023, per-capita incomes ranged from $511 in the Democratic Republic of the Congo (DRC) to $98,700 in Ireland. Most African countries would need to raise their per-capita income to Mauritius's level of $10,552 to achieve a one-notch rating improvement, all else constant.
Similarly, a 2025 United Nations Trade and Development report revealed that the Big Three placed greater emphasis on developing countries holding adequate reserves than on developed countries, forcing developing nations to invest in conservative, low-yielding assets. The KAS-Leibniz report applied a mathematical formula and concluded that the Big Three underrate African governments by an average of 0.5 to 1 notches—significant but not huge.
Moody's Denies Bias, Questions AfCRA's Viability
Moody's Marie Diron implicitly denied bias, stating that the company studied 40 years of debt defaults worldwide and found “perfect alignment” between African sovereigns and others in terms of default probability for given rating levels. David Lubin, Senior Research Fellow at Chatham House, questioned whether AfCRA would be seen as Africa “marking its own homework,” asking why portfolio managers would trust an African agency to rate objectively. However, Hannah Wanjie Ryder, CEO of Development Reimagined, argued that credit rating agencies should consider criteria like African governments' extraordinary efforts to avoid debt defaults, and that AfCRA would better understand African economic peculiarities, such as the informal sector.
Precedents and Path to Success
Precedents for regional credit rating agencies are not encouraging. The European company Scope, launched in 2012 to provide a Europe-based alternative to the Big Three, holds a global market share below 1% and has not succeeded in lowering credit costs for European issuers, according to the KAS-Leibniz report. For AfCRA to succeed, the AU, KAS-Leibniz report, and Chatham House discussion agree that it must be scrupulously independent and transparent, operating as a purely private company with no hint of AU or African government funding, and issuing ratings that bear full external scrutiny. Even if AfCRA does not improve financial conditions directly, it could help African governments improve their prospects for higher ratings from the Big Three by ensuring better understanding of African circumstances and promoting more open and independent ratings.
