Africa has launched its first homegrown credit rating agency as governments across the continent face a sharply rising cost of servicing external debt, with annual payments reaching $163 billion in 2024, up from $61 billion in 2010.

The Africa Credit Rating Agency (AfCRA), launched Wednesday in Mauritius, is designed to give investors an alternative assessment of African sovereigns, banks and companies and challenge the dominance of global agencies S&P, Moody’s and Fitch in determining how markets price the continent’s risk.

The initiative arrives as African governments argue that ratings can have a direct impact on their borrowing costs and access to capital. The African Union says African economies are rated B to B-minus on average, compared with BB for other emerging regions, a gap it says can discourage some investors and make financing more expensive.

A new voice on African risk

AfCRA was endorsed by African leaders in 2018 and will be headquartered in Port Louis, Mauritius. It is expected to rate sovereign borrowers, financial institutions and private companies while operating independently and funding its activities through shareholder capital and its own operations.

Afreximbank is among the institutions backing the agency. Denys Denya, the bank’s executive vice president, said the objective is to give investors more information and context when assessing African economies, arguing that uncertainty around the continent’s risk can translate directly into higher lending costs.

African leaders have repeatedly criticized the major Western ratings agencies, accusing them of moving too quickly to downgrade countries during crises including conflicts and the COVID-19 pandemic. The agencies have rejected claims of systemic bias, saying their methodologies are applied consistently across markets. A 2024 investigation into Africa’s debt crisis found no evidence of systemic bias in sovereign ratings assigned to African countries by the three major agencies.

Credibility will determine impact

The biggest challenge for AfCRA may not be attracting attention but convincing global investors that its ratings can withstand political pressure and financial crises.

Dennis Shen, a lecturer in finance at the International School of Management in Berlin and a former sovereign analyst at Scope Ratings, said a new agency starts with a promise but investors ultimately demand a track record. Its toughest test, he said, will come when markets are under stress and its assessments become politically or financially uncomfortable.

Former Nigerian Vice President Yemi Osinbajo also warned that AfCRA must meet international standards rather than become a nationalist alternative to existing agencies.

Africa’s $163 billion debt problem

The stakes are substantial. Africa’s external debt-service bill jumped from $61 billion in 2010 to $163 billion in 2024, according to the AU, with interest payments in some countries exceeding annual allocations for essential sectors such as health and education.

AfCRA is also entering a market with significant gaps in coverage. The AU says 23 African economies currently lack a rating from S&P, Moody’s or Fitch, leaving investors with limited standardized assessments when considering those markets.

If AfCRA can build credibility while providing ratings that investors consider independent and globally comparable, it could give African borrowers another tool to compete for capital — and potentially strengthen the continent’s negotiating position as debt costs remain elevated.