For governments, credit ratings can have significant impacts on access to finance and the cost of borrowing, directly influencing its capacity to deliver essential public services.
For African countries, the consequences of these ratings can be particularly severe, as a lack of transparency in rating methodologies makes it difficult to identify and challenge potential biases that often disadvantage developing economies. This leads to elevated borrowing costs, diverting resources away from critical sectors like healthcare, education and infrastructure.
The African Credit Rating Agency, currently being developed by the African Union and its partners, represents a potential turning point.
In an article featured in The Conversation Africa, UNU-CPR Senior Fellow Dr. Daniel Cash outlines how the African Credit Rating Agency could challenge the fundamental power dynamics of sovereign credit rating if guided by reform principles. "It is more than a new entrant; it is an attempt to rethink how financial authority is earned, exercised and scrutinised," he argues.
Read the full article here.
