Tinubu Urges Creation of Africa’s Own Credit Rating Agency to Reduce Borrowing Costs
In a Financial Times Op-Ed on Monday, President Bola Tinubu called for the creation of an Africa-owned credit rating agency to counter what he described as persistent mispricing of the continent’s economic risk by global markets. According to Tinubu, African nations are paying excessively high interest rates due to flawed assessments by the dominant international agencies—Fitch Ratings, Moody’s, and S&P Global Ratings—whose decisions often fail to reflect local economic realities.
The President explained that the so-called “Africa premium,” the gap between perceived and actual risk, is no longer sustainable. He noted that only three African countries currently have investment-grade ratings, despite projections by the International Monetary Fund that Africa is set to be the world’s fastest-growing region this year. Tinubu emphasized that structural flaws in how sovereign risk is measured cost the continent billions of dollars annually in higher interest payments and lost lending opportunities.
Tinubu highlighted Nigeria’s recent economic reforms as proof that improved transparency and policy adjustments can positively influence investor perception. Measures such as GDP rebasing, fuel subsidy removal, exchange rate liberalisation, and better debt reporting have supported non-oil growth and reduced dependence on crude price fluctuations. Yet, he noted, Nigeria’s sovereign rating still lags behind these reforms, even as investor demand for the country’s dollar-denominated bonds far exceeds supply.
The President stressed that a continental rating agency should complement—not replace—the Big Three, providing timely, on-the-ground evaluations of African economies. He argued that current global models rely too heavily on remote judgment, which fails to capture local realities, and warned that delayed recognition of reforms imposes real financial costs, especially on smaller African nations with limited analyst coverage.
Tinubu’s call follows tensions between Fitch Ratings and Afreximbank, which recently terminated its credit rating relationship with the agency over disagreements about sovereign exposures and non-performing loan assessments. Experts have long criticized international agencies for using one-size-fits-all models that inflate borrowing costs for African countries despite improving macroeconomic fundamentals, reinforcing Tinubu’s argument for a homegrown solution that better reflects the continent’s realities.
source: nairametrics