Moody’s rating of African countries

MOODY ‘S RATING

OF AFRICAN COUNTRIES

African Union to establish credit rating agency for continent: The Africa Peer Review Mechanism (APRM) has kick started the process of designing a legal and structural framework for the establishment of a creditrating agency as an independent entity of the AfricanUnion (AU).

The framework, which is based on the outcome of an APRM feasibility study that supports the move to provide alternative and complimenting rating opinions, would also look at the financial implications of setting up the African Credit Rating Agency (CRA).

Professor Eddy Maloka, the Chief Executive Officer (CEO) of the APRM, made this known at a sensitisation meeting on APRM support to member states on international credit rating agencies.

“We will be reporting the outcomes to the Specialised Technical Committee of Finance Ministers Committee later this year,” he said.

The non-reflection of average improvement in political, economic, and social indicators in rating of African countries by international rating agencies, he said, explained the rise in discontentment of operations of those agencies.

Such inconsistencies, which had led to sovereign rating downgrades of Africancountries since the outbreak of COVID19, he said, justified the rationale behind the decision of the AU Assembly in January 2017 to direct the APRM to provide support to AU Member States in the field of Credit Rating Agencies.

“Some countries were downgraded before they even registered a single case of Covid-19. Most of these rating decisions were merely based on expectations that countries’ fiscal situations would deteriorate and their health systems would be severely strained by the pandemic,” he stated.

LOW CREDIT RISK

MODERATECREDIT RISK

SUBSTANTIAL CREDIT RISK

HIGHCREDIT RISK

VERY HIGH CREDIT RISK

COUNTRY NOT RATED

BY MARK-ANTHONY JOHNSON