AfCRA faces investor trust test with Africa debt service at $163 bn

Africa Credit Rating Agency, or AfCRA, launched in Mauritius on Oct. 7 as AU figures put Africa’s external debt-service payments at $163 billion in 2024, Daily Maverick reported in a Nov. 5 article.

That debt-service total is more than double the $61 billion recorded in 2010, sharpening pressure on African governments seeking capital for infrastructure, energy and industrial development.

AfCRA is designed to assess governments, banks, companies and other borrowers while operating alongside Moody’s Ratings, S&P Global Ratings and Fitch Ratings. Credit ratings are formal assessments of repayment risk and can affect borrowing costs and whether institutional investors may buy a bond.

Nomahlubi Jakuja, a South African economist, told Bird Story Agency in 2025 that credibility would decide whether the agency matters. “It will have to establish credibility among investors to be effective,” Jakuja said.

The AU-backed effort traces to 2017, when the African Peer Review Mechanism was asked to help member states in their dealings with rating agencies. Daily Maverick reported that feasibility work and planning preceded the choice of Mauritius as host.

The financing backdrop is difficult. The OECD’s Africa Capital Markets Report 2025 found that lower-middle-income African countries paid about one percentage point more on foreign-currency bonds than comparable economies elsewhere between 2022 and 2024, while African dollar bond yields approached 9% in 2024, the highest among the regions covered.

AfCRA’s supporters argue that more local data could reduce broad-brush views of African risk. Kenneth Ekesa, a researcher and analyst at the African Economic and Social Research Institute, said current approaches may understate the informal economy, economic resilience and regional trade potential under the African Continental Free Trade Area. “The issue has never been Africa’s actual economic performance, but rather the lens through which it is viewed,” Ekesa said.

Separate estimates point to the cost of perception. The UN Development Programme estimated in 2023 that African countries paid more than $24 billion in excess interest and lost more than $46 billion in forgone lending. In another estimate, UNDP said countries could save as much as $74.5 billion if sovereign ratings relied on less subjective assessments.

Daily Maverick also cited a 2024 study by Africa No Filter and Africa Practice that put the annual debt-service cost of stereotypical media narratives at $4.2 billion across Nigeria, Kenya, Egypt and South Africa. The article said that estimate addressed country perceptions and media portrayals, not costs attributed solely to rating agencies.

AfCRA’s opening may come in domestic capital markets, where pension funds, insurers and banks often face rules on the bonds they can hold. Oluwakemi Owonubi Babalogbon, a mergers and acquisitions, corporate finance and asset management analyst, cited Nigeria, Kenya and the West African Economic and Monetary Union as markets where rating recognition can affect access to institutional capital.

Regulatory acceptance would not guarantee market use. Daily Maverick reported that AfCRA must still show its data are reliable, its methods transparent and its judgments independent, including when ratings are negative.

The AU says 32 of Africa’s 55 countries are rated by the three major international agencies, leaving 23 without such assessments.