A new initiative is being launched by the African Development Bank (AfDB) to assist the continent’s countries to improve their sovereign credit rating and subsequently bring down borrowing costs.
AfDB President Sidi Ould Tah stated at the S&P Emerging Markets Conference in London that poor data, lack of transparency and market infrastructure was harming the perception of African economies.
The new initiative, to be rolled out through the African Legal Support Facility, will see governments supported in their preparations for credit assessments. It will also provide information to international rating agencies.
The News Chronicle reports that only three of Africa’s 54 economies currently have investment-grade credit ratings. The President stated that improving the situation would enable the continent to access affordable international credit.
Tah said that better presentation of economic data will remedy information challenges which influence sovereign credit ratings.
This latest move comes after African leaders have been calling for an end to the perceived unfairness of the credit rating system and its impact on the continent.
The African Union-endorsed African Peer Review Mechanism is currently working on the establishment of an Africa-wide credit rating agency.
In addition to addressing sovereign ratings, the AfDB is also targeting pension funds, banks and other investors in order to develop domestic capital markets and facilitate funding.
