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Conditions are Ripe to Advance the Idea of Establishing an African Credit Rating Agency 

The credit rating industry in Africa is dominated by the three international agencies: Moody’s, S&P and Fitch. Together they control an estimated 95% of the credit rating business globally. South Africa was the first African country to receive a sovereign rating, in 1994. To date, 32 African countries have received a sovereign rating from at least one of the “big three” agencies. But policy makers are increasingly dissatisfied with their approach and methodology. Some of the criticisms are that agencies are quick to downgrade African countries but slow when upgrades are due; that they fail to accurately account for risk perception; that they don’t consult adequately with stakeholders; and that they lack independence and objectivity. A recent study by the UN showed that subjective biases in credit ratings had cost African countries a combined US$74.5 billion. This was through funding opportunities lost and excess interest paid on public debt.