African Union To Establish African Credit Rating Agency

Innoventia Africa – The African Union (AU) is considering establishing its own credit rating agency, known as the African Credit Rating Agency (ACRA), according to a report for the United Nations Economic Commission for Africa.

The move is in response to growing dissatisfaction among African policymakers with the assessments of global credit rating agencies such as Moody’s, Fitch and S&P, which have made unwarranted downgrades in developing countries, yet continue to influence global financing decisions and the flow of capital, according to the report.

Ghana’s President Nana Akufo-Addo has criticized global credit rating agencies for their downgrades, which he argued can exacerbate fiscal challenges.

This sentiment has led to calls for an African-led credit rating agency that can provide more balanced and comprehensive opinions on African credit instruments.

The ACRA, if established, could help mitigate these challenges and improve the credit rating process in Africa.

The report also recommends regulating the timing of rating issuance and publishing a rating calendar, as well as increasing transparency in data used in the credit rating process.

The establishment of the ACRA remains a concept under consideration, but it reflects ongoing efforts by the AU to address issues related to credit ratings on the continent.

This move could signal a significant step toward greater financial independence and stability for African nations in the global financial landscape.

By Felix Tih

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