When the Africa Credit Rating Agency opened its doors in Mauritius this October, it landed in the middle of a conversation that has been simmering for years. African governments and businesses have long argued that the "big three" international rating agencies, Fitch, Moody's and S&P, price risk on the continent too high, pushing up borrowing costs in ways that hit public finances hard. AfCRA says it will change that by using methodologies built around African realities rather than frameworks that were never designed with the continent in mind.
But Raymond Gilpin, chief economist at the UNDP's regional bureau for Africa, thinks the debate is missing something important. "The fact that the market prices risk on the African continent at a really high level is costing Africa a lot. But the root cause of this problem is at times misdiagnosed," he says. His point is that methodology is only part of the story. The quality and coordination of data that governments bring to the process matters just as much, and right now, that data often fails to show a clear picture of an economy's future capacity to carry and repay debt.
That gap in preparedness is exactly what UNDP's Africa Credit Ratings Initiative is trying to close. Through workshops held across the continent, ACRI helps government officials understand how credit rating agencies work, what data they need, and what public institutions are expected to do throughout the process. In the last year and a half, the initiative has trained more than 400 professionals from 23 countries.
UNDP has also developed an online course in partnership with the UN System Staff College, giving officials a foundational grounding in sovereign credit ratings. Three cohorts have already completed the programme, and the plan is to grow it further. The logic is straightforward: when African countries show up to the ratings process better prepared, they are also better placed to make the domestic changes that improve their standing over time.
Whether AfCRA can shift how the continent is priced in global markets remains to be seen. But Gilpin's argument is a reminder that the most powerful lever might not be a new agency at all. It might be the officials sitting across the table from the analysts, and how well they know the game being played.
Originally published by African Business.