The agency has acquired a majority shareholding in Global Credit Rating (GCR), a leading credit rating agency in Africa. The move is based on Moody’s anticipation that there will be a robust increase in demand for credit rating services in Africa. Moody’s also has a significant stake in the Egypt-based Middle East Rating and Investors Service or MERIS. GCR is the largest rating agency headquartered in Africa. It accounts for most of the ratings issued on the continent. It was established in 1996 and is based in Mauritius, with offices in South Africa, Nigeria, Kenya and Senegal. The ‘big three’ rating agencies – Moody’s, S&P Global Ratings and Fitch – control more than 95% of the global credit rating business. They have been accused of monopolising the credit rating market by implementing anti-competition tactics to maintain their market dominance. In the US and Europe, they were fined for anti-competition practices. Other shortcomings include a lack of understanding of the domestic context of African economies. This is because their primary analysts barely conduc t field visits in rated countries. Moody’s only has one office in South Africa which covers all the 28 African countries that it assigns ratings.
SOURCE: THE CONVERSATION