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The African Union Intends to Launch a New African Credit Rating Agency in 2024

The agency, which would craft its own assessment of the risks in lending to African countries, would be based on the continent, said Misheck Mutize, lead expert for country support on rating agencies with the African Union. It will also add context to the information investors consider when deciding whether to buy African bonds or lend privately to countries, Reuters reported. Mutize noted that there is already substantial interest from the private sector to contribute to the implementation of this initiative. Credit ratings remain a highly influential tool investors use in their capital allocation. 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. But the AU, along with leaders from member nations, has, at different times, contended that the “big three” rating agencies’ global ratings do not fairly assess the risk of lending to African countries. Some of the criticisms are that agencies are swift to downgrade African countries but slow when upgrades are due.