Africa’s biggest financial complaint isn’t that it lacks capital, but that it has been paying too much to access it. The continent’s answer is its own credit rating agency, set to open its doors in October, following multiple false starts since mid-2025.

Seeking to quell concerns over further slippage, an official of the African Peer Review Mechanism (APRM), which is leading and coordinating the establishment of the Africa Credit Rating Agency (AfCRA) on behalf of the African Union, told journalists on July 29 that the project had moved “far much faster than we expected”.

The excitement is understandable. The agency was conceived to tackle what its backers regard as one of Africa’s most expensive market distortions: inflated perceptions of sovereign risk. The APRM, the UN Economic Commission for Africa, the UN Development Programme (UNDP) and Afreximbank all argue that the continent pays an unjustified “Africa premium”, with a 2023 study commissioned by the UNDP estimating that more objective sovereign credit ratings could reduce the continent’s borrowing costs by as much as $74.5-billion a year.

These organisations and other critics of assessments by the dominant three global agencies – Fitch, Moody’s and S&P Global – argue that their methodologies fail to account adequately for Africa’s economic diversity, reform trajectories and resilience, with sovereign downgrades often coming faster and pessimistic assessments becoming self-fulfilling by raising borrowing costs, which worsens debt dynamics and makes future downgrades more likely.

Weighing in on this debate, experts at the US-based Brookings Institution noted in a 2024 commentary that the $75-billion-odd in excess borrowing costs is far greater than the entire official development assistance to the continent, which amounted to $30-billion in 2021, more than twice the cost of reducing malaria by 90% – about $34-billion – and about six times greater than the $12.5-billion required to vaccinate 70% of Africans to achieve herd immunity to Covid-19.

What’s more, the Jubilee Report on global sovereign debt, compiled by a team led by famed economist Joseph Stiglitz and released in 2025, found that more than 750-million Africans – more than half the continent’s population – live in countries that spend more on servicing debt than on education or healthcare. It added that the accuracy of the global agencies’ assessments “remains weak”.

But the case is far from closed. A 2023 International Monetary Fund working paper found that while African countries faced a premium in their borrowing costs compared with peers from other regions, when financial-sector development, budget transparency, the size of the formal economy and the strength of institutions are considered, that premium disappears. In other words, according to the working paper’s authors, the Africa premium is attributable to investor concerns about identifiable factors, and not to a broad negative bias towards the continent.

The credit rating agencies themselves have made similar arguments, with former S&P chief ratings officer Moritz Kraemer having claimed in 2024 that, in fact, “Africa’s ratings have been too high, not too low”, because African issuers have had a slightly higher default rate than non-African issuers with the same rating level.

Nevertheless, when someone of the stature of Stiglitz – a joint winner in 2001 of the Nobel Memorial Prize in Economic Sciences with George Akerlof and Michael Spence – argues that the global financial architecture systematically disadvantages developing countries, it would be cavalier to dismiss Africa’s grievances. He has long contended that the international financial system often prices developing-country risk too conservatively. While that doesn’t prove Africa’s case beyond doubt, it does suggest that those building the new agency deserve the benefit of the doubt and, more importantly, the opportunity to make their case through evidence rather than rhetoric.

But giving the new agency a fair hearing shouldn’t mean giving ourselves as Africans an easy ride. If it is to earn credibility, it must resist the temptation to explain away every unfavourable assessment as foreign prejudice. Mo Ibrahim’s foundation has repeatedly warned of democratic backsliding, weakening institutions and deteriorating governance across parts of the continent.

Indeed, the Mo Ibrahim Prize for Achievement in African Leadership, for recently retired heads of State, has not been awarded since 2020, and in several years before that the prize was withheld because the independent prize committee concluded that no one met its exacting standards.

If the AfCRA is to change how the world prices Africa, it must prove that it is prepared to price Africa honestly.