Africa urged to Promote Local Sovereign Credit Rating Agencies

ADDIS ABABA – African countries urged to promote local sovereign credit rating agencies as persistent downgrades of their debt by global institutions continue to affect recovery from pandemic shock.

The urge was made by an African Peer Review Mechanism (APRM) official during a gathering of representatives from 14 African countries, rating agencies, regulators and partners, and experts in Durban last week.



During the UN Economic Commission for Africa (ECA) and APRM organized meeting, participants discussed the low credit ratings and persistent downgrades of African Governments debt.

These issues, according to the organisors, are detrimental to the continent’s investment competitiveness and recovery efforts from the COVID-19 pandemic shock.

Dr. McBride Nkhalamba, the Director of Specialized Governance and Reporting at APRM highlighted that credit ratings are an important part of the global financial architecture reform.

“It is important for African countries to address the regulatory gaps and promote local sovereign credit rating agencies,” Dr. McBride echoed.

The three-day meeting last week involved three segments – the first Meeting of the Network of National Regulators on Credit Ratings; the second Meeting of Member States Credit Ratings Liaison Officers; and the seventh Ad-hoc Committee Meeting on Credit Ratings.

“This meeting comes at a time when the continent is facing enormous debt management challenges and difficulties in improving or maintaining good credit ratings,” said Sonia Essobmadje, Chief of ECA’s Innovative Finance and Capital Markets Section.

Sonia went on to stress the need “to improve and harmonize the regulation of credit rating agencies on the continent,” as well as building capacity and improving the reliability and availability of data.



Experts also discussed the fundamental functions of credit ratings, and their failures during multiple financial crises that showed regulatory and supervisory oversight on rating agencies was crucial to enhance integrity, accountability, good governance, and independence of credit rating activities.

They recommended the National Regulators to champion the enactment of legislation on Credit Rating Services to ensure that regulation of international credit rating agencies is ‘at least at par with international requirements’ of regulated and accountable credit rating agencies.

The meeting also recommended Governments to strengthen their Credit Ratings Country Liaison Teams to be able to respond to emerging needs and better engage with rating agencies.

The Terms of Reference for Network of National Regulators of Credit Rating Agencies has successfully been adopted at the end of the meeting, according to the ECA.

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