The Africa Credit Rating Agency (AfCRA) has been established to provide credit ratings and help deepen Africa's capital markets. The agency's success will be measured by its ability to help African countries make progress in areas such as infrastructure, energy, and manufacturing. According to Misheck Mutize, a post-doctoral researcher at the University of Cape Town, AfCRA is not a rival to established global rating agencies, but rather a new lever for expanding and deepening Africa's capital markets.
Africa has a large pool of domestic capital, but it remains concentrated in short-term investments such as 90-day treasury bills and bonds. This type of investment cannot generate or sustain economic growth. The credit ratings industry in Africa is small, but it plays a vital role in influencing how investors allocate capital and setting the price at which capital is deployed. The industry provides investors with clearer information about the risks of lending, making them more confident about providing long-term financing to businesses and governments.
The number of entities that have a rating from any of the rating agencies is currently less than 5% of the total estimated capital in Africa. Africa has an estimated $4 trillion domestic capital base, but less than $500 billion worth of financial instruments and economic entities are subject to formal credit ratings. In comparison, mature financial markets have a much larger number of credit ratings. For example, there were 823,000 credit ratings in the European Union and over 2 million credit ratings in the US at the end of 2025.
The Africa Credit Rating Agency has a fourfold aim. Firstly, it will provide ratings to help investors make informed decisions. Secondly, it will help expand Africa's ratings industry and bring greater credit intelligence to over $3.5 trillion in capital currently invested without formal ratings. Thirdly, the agency will provide an opportunity to expand Africa's financial markets by creating a larger and deeper information ecosystem. Fourthly, it aims to break the cycle in which perceptions of risk currently keep capital on the sidelines.
The ratings industry is evolving, with international rating agencies recognising the value of contextual risk analysis. This requires having more locally based analysts who understand the economic, political, and institutional realities of the markets they assess. S&P Global's acquisition of Nigeria-based Agusto & Co and Moody's earlier acquisitions reflect the growing recognition of the importance of local expertise and context in assessing African risk.
The Africa Credit Rating Agency deserves the opportunity to prove itself. Its success will depend on the institution itself, as well as on investors, policymakers, financial institutions, and other rating agencies working together to build a more balanced financing architecture. Criticism and scrutiny are necessary, but they should not become grounds to dismiss the new institution prematurely.
The launch of AfCRA has generated an important debate about the role of credit rating agencies in Africa. While some analysts have questioned whether Africa needs another rating agency, others see it as a pioneer of a stronger, deeper, and more efficient African financing ecosystem. The agency's impact will be measured by its ability to help mobilise the capital the continent already has and to support the growth of African businesses.
Key points
- The Africa Credit Rating Agency aims to provide ratings and help expand Africa's capital markets.
- The agency's success will be measured by its ability to help African countries make progress in areas such as infrastructure, energy, and manufacturing.
- The launch of AfCRA has generated an important debate about the role of credit rating agencies in Africa.
