A panel of Africa experts has called on the Group of 20 major economies to tighten oversight of global credit rating agencies, warning that flawed and opaque methodologies are pushing up borrowing costs for African governments.
In a report submitted on Tuesday under South Africa’s G20 presidency, the panel said rating agencies display “perception biases,” often scoring African countries as riskier than regions with similar economic fundamentals.
With a G20 summit approaching this weekend, the experts urged member nations to require stricter oversight and mandate greater transparency around the data and models used in rating decisions, as seen on Reuters
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The report also recommended that rating frameworks be updated to reflect the diversity of African economies, including their growth potential and natural resource strengths, while cautioning agencies against knee-jerk downgrades that can worsen financial stress. S&P Global Ratings, Moody’s, and Fitch have dismissed allegations of regional bias, insisting that their sovereign ratings rely on globally consistent, publicly available criteria applied equally to all countries.
Meanwhile, the African Union is developing an African Credit Rating Agency, expected to launch in the second half of 2025, to provide assessments rooted in Africa’s own economic realities.
According to the panel, perception bias embedded in existing global rating methodologies continues to inflate the cost of raising capital for African governments and companies operating in international financial markets.
“The rating agencies’ methodologies remain flawed,” the report stated, noting that the agencies make it difficult to scrutinise or challenge their conclusions.
The panel was chaired by former South African Finance Minister Trevor Manuel and included Nobel laureate economist Esther Duflo and former African Development Bank President Donald Kaberuka
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Image Credit: Reuters
