At first glance, credit ratings appear to be little more than a technical assessment; a collection of letters and numbers assigned by an agency to signal the creditworthiness of an institution.
Yet for development finance institutions and sovereigns, ratings are far more consequential. They influence how much capital can be raised, how cheaply it can be accessed, and ultimately how many roads, hospitals, power plants, industrial parks and businesses can be financed.
That is why S&P Global Ratings' recent affirmation of African Export-Import Bank (Afreximbank) at BBB+ with a Stable Outlook deserves attention beyond the narrow confines of financial markets.
It is also the reason why the coming of the Africa Credit Rating Agency (AfCRA) deserves consideration. The promoters hope AfCRA will incorporate more Africa-specific data and regional context into its analysis in reviewing government finances, debt levels, economic growth, foreign exchange reserves, governance indicators and other factors affecting a borrower's ability to repay debt.
Originally published by African Business.