Africa underserved by international rating agencies: UNECA Chief --[Reported by Umva mag]

Africa has experienced chronically low credit ratings from three international rating agencies namely S&P Global Ratings (S&P), Moody’s, and Fitch Group, Claver Gatete, United Nations Under-Secretary-General and Executive Secretary of Economic Commission for Africa (ECA), has said.

His remark came during a high-level dialogue on the establishment of an African credit rating agency in New York, United States.

“Currently, out of 33 Africa countries with sovereign credit ratings from at least one out of the three major rating agencies, only 2 (Botswana, Mauritius) are in the investment grade,” said Gatete in a statement seen by APA on Sunday.

He said moreover, three African frontier market countries (Ethiopia, Ghana and Zambia) have defaulted on their sovereign debts. All three have approached the G20 Common Framework for debt treatment, but the process has been lengthy and complex.

According to the Executive Secretary, Africa faces a massive debt challenge, with the continent expected to pay $163 billion in 2024 just in interest.

“Multiple downgrades from already low levels have exacerbated Africa’s current fiscal challenges. The fiscal space has been put under pressure by rising borrowing costs, reduced investor confidence, triggered capital flight and aggravated risk perceptions. Credit rating downgrades have been a major contributor to these factors,” he said.

Gatete said in 2023 alone, 17 downgrades were recorded across nine African countries, with only a single upgrade granted to the Republic of Congo.

The Executive Secretary said the fallout of these actions includes high debt repayment costs, with approximately 60 percent of countries allocating more resources to external debt interest payment than investments in social and climate actions.

He said all these are occurring when Africa is in urgent need of resources to achieve the SDGs and Agenda 2063 targets.

MG/as/APA

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