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The United Nations Economic Commission for Africa (ECA) has called for urgent reforms to sovereign credit rating systems, warning that outdated practices continue to hinder African countries’ access to affordable capital—despite growing evidence of macroeconomic resilience and structural reform across the continent.
Speaking at the opening of the inaugural Africa Annual Credit Ratings Conference in Cape Town on May 21, Zuzana Schwidrowski, Director of ECA’s Macroeconomics, Finance and Governance Division, said inconsistent and obsolete rating methodologies were contributing to disproportionately high borrowing costs for African nations.
“Africa’s development should not be held hostage by narrow perceptions of risk,” Schwidrowski said in a statement issued on Monday.
He said: “The Credit ratings are more than technical assessments—they influence access to development finance, shape investor sentiment, and directly impact the cost of capital.”
Currently, only two African countries hold investment-grade ratings. Schwidrowski argued that this reflects not only fiscal challenges but also systemic flaws in how global rating agencies assess sovereign risk in Africa.
She cited issues such as limited coverage, outdated data, and structural biases that overlook ongoing reforms and local economic fundamentals.
“Improving sovereign and sub-sovereign credit ratings is not just about market access—it’s about building investor confidence, expanding fiscal space, and unlocking the full potential of domestic resource mobilization,” she added.
Schwidrowski emphasized the continent-wide efforts to improve domestic creditworthiness and establish regionally grounded rating systems.
She noted coordinated work by central banks, finance ministries, and regional bodies to increase debt transparency, widen tax bases, curb illicit financial flows, and strengthen statistical systems.
At the institutional level, the ECA is assisting countries in enhancing fiscal risk management, issuing local currency bonds, and developing resilient domestic capital markets.
These measures, she said, were key to enabling African governments to take control of their financial narratives and advocate for fairer assessments from rating agencies.
Aligning credit rating improvements with broader structural transformation goals, Schwidrowski said, would magnify the effects of reforms and facilitate long-term sustainable investment.
“Stronger credit ratings are signals of economic stability and good governance—qualities sought by both domestic and international investors,” she said.
The two-day conference was hosted by the African Peer Review Mechanism in collaboration with the ECA, UNDP Africa, and AfriCatalyst.
It brings together policymakers, economists, rating analysts, and development partners to explore reforms to credit rating methodologies and strengthen Africa’s access to sustainable financing.
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