The Africa Credit Rating Agency (AfCRA) has drawn two readings since it emerged: a challenger to Fitch, Moody’s and S&P Global, or an unnecessary addition to a continent that already has raters.
Both miss what the institution is actually for, according to Misheck Mutize, an academic who researches African financial markets and credit rating agencies and serves as a Lead Expert on Credit Ratings with the African Union.
In a piece for The Conversation, Mutize argues AfCRA should not be judged as a head-on competitor to agencies that have operated for a century.
Its purpose, as he frames it, is to expand and deepen Africa’s capital markets, broaden credit intelligence and redirect capital toward infrastructure, energy and manufacturing.
The gap it is meant to address is one of scale. Africa holds an estimated US$4 trillion in domestic capital – savings controlled by pension funds, sovereign wealth funds, banks, insurers and other investors.
Most of that money sits in short-term 90-day treasury bills and bonds, instruments that are liquid and easy to convert to cash but poorly suited to financing long-lived projects.
Formal credit ratings cover only a small slice of that base.
Fewer than 5% of the continent’s estimated capital is held in entities or instruments rated by any agency – less than US$500 billion across sovereigns, corporates, financial institutions, municipalities, government-related entities and other issuers.
Mature markets look very different. At the end of 2025, the European Union had 823,000 credit ratings assigned by international and domestic agencies, while the United States had more than 2 million.
Africa has nine rating agencies in operation, against 10 in the US and 29 active agencies in the EU.
The aim
Mutize sets out four anticipated roles for AfCRA. The first is straightforward: to provide ratings.
The second is to widen the ratings industry so that more than US$3.5 trillion in capital currently invested without formal ratings can be brought into the system – much of it parked in treasury bills, money market funds and fixed-term deposits.
The third is to build a larger information ecosystem. For investors, Mutize writes, the value of a rating lies less in the category itself than in the assumptions, evidence, rationale and context behind it.
On that view, AfCRA’s worth will be measured by how well its analysis helps investors separate genuine credit weaknesses from risks that look larger than they are because of limited information, inadequate data or thin contextual understanding.
The fourth is to break a cycle in which risk perceptions keep capital on the sidelines, push it offshore or hold it in short-term assets while productive African businesses struggle to secure long-term financing.
Narrowing that information gap, Mutize argues, requires investors to become more analytical about risk and borrowers to understand better what drives their creditworthiness.
Market-building exercise
The established agencies are already moving in this direction.
Mutize points to S&P Global’s acquisition of Nigeria-based Agusto & Co, which operates across several African markets, and to Moody’s earlier purchases of Middle East Rating & Investors Services, the West Africa Rating Agency (WARA) and GCR.
Those deals, in his reading, reflect growing recognition of the value of locally based analysts who understand the economic, political and institutional realities of the markets they assess.
Way forward
Mutize’s conclusion is that AfCRA should be given room to prove itself, with its success depending on the institution and on investors, policymakers, financial institutions and other rating agencies working together.
Criticism and scrutiny, he writes, are necessary – but should not become grounds to dismiss the new body prematurely.
Source: The Conversation
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