Africa Credit Rating Agency Faces Credibility Test on Methodologies

Africa’s new home-grown rating agency must convince investors that it won’t be prone to local bias as it opens its doors for business. “The first hurdle will be inevitably credibility, because a new rating agency begins with a promise while investors ultimately require a track record,” said Dennis Shen, a lecturer in finance at the International School of Management in Berlin. “The second hurdle will be demonstrating that its methodologies are rigorous enough to ease scepticism of any visible pro-African bias,” he said. Launched on Wednesday in Balaclava, north of the Mauritian capital of Port Louis, the Africa Credit Rating Agency is a continental initiative to provide alternative assessments of repayment risk. It was initially proposed almost a decade ago in response to the view of many African governments that they don’t get treated fairly by international rating agencies and have to pay a so-called prejudice premium to borrow as a result. “This is a big statement by the continent that we are ready to manage our own affairs, to do business with the rest of the world, but at an international standard,” said Marie-Antoinette Rose Quatre, chief executive officer of the African Peer Review Mechanism, a specialised agency of the African Union. The new rating agency will present its methodology, rating scale and timetable to start delivering assessments on Thursday. “I do expect AfCRA results to be different for many methodological reasons, but different does not mean not credible,” said Hannah Wanjie Ryder, CEO of consultancy firm Development Reimagined. “What AfCRA’s leadership will need to do is demonstrate a methodology that is clear, defensible and transparent.” Follow us on our official channels: or create a free account . Free users can leave 4 comments per month. Subscribers can leave unlimited comments via our website and app .