Keypoints:
- AfDB plans sovereign ratings support initiative
- Better data could improve risk assessment
- AfCRA set for October 7 launch
THE African Development Bank is preparing a new initiative to help African governments deal more effectively with sovereign credit ratings, as the continent intensifies efforts to bring down borrowing costs that have squeezed public finances and limited investment.
AfDB President Sidi Ould Tah said the programme would help countries strengthen economic data, improve transparency and prepare more effectively for assessments by international credit rating agencies.
The move is part of a much wider African push to change how governments raise money, how investors assess risk and how more of the continent’s own capital can be put to work at home.
Speaking at the S&P Emerging Markets Conference in London on October 1, Tah argued that weak data and limited transparency in some markets could contribute to perceptions of greater risk and, in turn, higher borrowing costs.
‘What is missed in Africa is the data and the infrastructure…the opacity in some markets creates this notion of high risk, which leads to high cost of borrowing,’ Tah said, according to Reuters reporting from the conference.
Data moves to centre of ratings debate
The initiative will be delivered through the African Legal Support Facility and is expected to help governments improve the quality of information, disclosure and preparation surrounding sovereign ratings.
It will not issue ratings or guarantee countries an upgrade. Instead, the programme is intended to ensure that governments entering the ratings process are better prepared and that agencies and investors have stronger information on which to base their assessments.
Tah said just three of Africa’s 54 countries currently have investment-grade ratings, highlighting the difficulties many governments face when trying to borrow internationally at affordable rates.
African governments and continental institutions have long argued that perceptions of risk can make financing unnecessarily expensive. Debate over Africa’s so-called risk premium has become increasingly important as debt-service payments consume money that could otherwise be directed towards infrastructure, health, education and industrial development.
The major international rating agencies reject claims that African sovereigns are systematically treated unfairly, maintaining that the same methodologies are applied across countries.
That makes the quality of national data, fiscal credibility and transparency increasingly important parts of the debate.
Part of a bigger financing reset
The ratings initiative also fits into the AfDB’s broader attempt to overhaul the way Africa finances its development.
At the centre of that effort is the New African Financial Architecture for Development, or NAFAD.
The AfDB says the framework is designed to mobilise more African resources, reduce the cost of capital, strengthen guarantee and risk-sharing mechanisms and channel more money into productive investment.
African Union leaders endorsed NAFAD in February 2026, before financial institutions, investors, banks and regulators adopted the Abidjan Consensus in April. Among its commitments is the development of a continental guarantee and risk-sharing system aimed at lowering financing costs for African borrowers.
The scale of the challenge is considerable.
The AfDB estimates that Africa faces a structural development financing shortfall of more than $400bn each year. At the same time, it estimates that the continent has more than $4tn across commercial banks, pension and insurance funds, foreign-exchange reserves, development banks, sovereign wealth funds and other pools of capital.
The Bank’s argument is that Africa does not simply lack money. Much of the capital it already has is fragmented or held in short-term, relatively low-risk and offshore investments rather than being channelled into long-term development.
That thinking is also reflected in the wider drive to mobilise more financing within Africa as aid budgets come under pressure and governments look for alternatives to repeated external borrowing.
AfCRA prepares to enter the market
The AfDB announcement comes at an important moment for Africa’s ratings debate.
The African Peer Review Mechanism is due to officially launch the Africa Credit Rating Agency, or AfCRA, on October 7.
AfCRA and the AfDB programme serve different purposes.
AfCRA is being established to issue sovereign, sub-sovereign and corporate ratings. The AfDB initiative, by contrast, will help governments prepare more effectively for ratings, including those carried out by existing international agencies.
Together, however, they reflect a growing effort to improve the way African economies are assessed and financed.
As Africa Briefing reported ahead of AfCRA’s launch, the new agency will face an immediate test of its own credibility. To win the confidence of investors, it will need to demonstrate that a deeper understanding of African economies does not come at the expense of independence or rigorous assessment.
Better data will not solve everything
More accurate and timely information could make sovereign risk easier to assess, but it will not by itself solve Africa’s borrowing problem.
Ratings are shaped by much more than data. Public debt, budget deficits, foreign-exchange reserves, economic growth, external financing needs, institutional strength and a government’s record of servicing its obligations all matter.
Countries facing serious fiscal pressures will therefore not automatically secure better ratings simply because their statistics improve.
But stronger data could reduce uncertainty and give rating agencies and investors a clearer picture of individual economies.
That is where the AfDB initiative could prove useful.
Alongside guarantees, stronger local capital markets, greater use of African institutional savings and the emergence of AfCRA, the ratings programme adds another piece to a much larger effort to address one of Africa’s most persistent economic problems: the cost of raising money.
For Tah and other African financial leaders, the goal is not simply to attract more capital. It is to build a financial system in which risks are easier to understand, African savings can be put to greater use and governments have a better chance of securing financing on sustainable terms.
Whether that eventually leads to significantly lower borrowing costs will depend on much more than credit ratings. But improving the information on which those ratings are based is one place to start.
