An African-led credit rating agency is being proposed amid concerns that international ratings do not always reflect the continent’s economic realities. Supporters argue that an African-based agency could provide more context-sensitive assessments and contribute to a more balanced understanding of the continent’s economies.
Dr Paul Kariuki, Executive Director of the Democracy Development Program and Senior Research Associate at the University of Johannesburg’s School of Public Management, Governance and Public Policy, said the proposal reflects a changing mindset among African policymakers.
Kariuki said the idea would have been difficult to advance in previous years, given the influence of the three major international credit rating agencies.
“Africa as a continent was not bolder, like it is becoming now in trying to change the narrative of the world about what Africa is about and what Africa needs to do,” he said.
Kariuki believes an African-led agency could play an important role in allowing the continent to present its economic realities from its own perspective.
“This is a very important aspect of African development as far as repositioning our narrative, told by our own stories, our own perspectives and insights about our own continent,” he said.
The proposal was first mooted by the African Peer Review Mechanism, in partnership with the African Union, in 2018.
Kariuki said concerns have long been raised about how international ratings are determined and their potential impact on investment.
“The discussion has not been much to do with the rate itself, or the class of the rate, but it’s the rationale that has been used to arrive at a conclusion,” he said.
He said African economies need greater investment to support development and create opportunities.
“Our continent is in dire need to attract investors to capitalize on its natural wealth and be able to create the development that African people need right now.”
Kariuki said the proposed agency should ultimately ensure that Africa’s economic story is “based on facts and not based on desktop research.”
Listen to the full interview below:
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