African Union chief wants pan-African ratings agency

Senegalese President Macky Sall known as Sunday for the introduction of a pan-African credit score rating company announced that the “very arbitrary” nature of the gadget of evaluation by means of international groups made it greater expensive for African countries to borrow on worldwide debt markets.

Sall, who is currently head of the African Union, told private radio RFM that there has been a need — “given the injustices, the every now and then very arbitrary rankings” by means of worldwide corporations — “to have a pan-African” body.

His comments came on the eve of the Dakar Economic Conference 2022, organized by African economists.

“In 2020, when all economies were suffering the fallout from the Covid-19 pandemic, 18 of the 32 African economies rated by at least one of the big agencies saw their ratings downgraded,” he said.

That meant that 56 percent of African international locations noticed their credit score rankings downgraded, compared with 31 percent of nations globally over the identical period, Sall argued.

“Studies show that at least 20 percent of the rating criteria for African countries are based on more subjective factors, cultural or linguistic ones for example, which bear no relation to the parameters used for measuring economic stability,” he said.

As a result, “the perception of investment risk in Africa is always much higher than the real risk. That means our insurance premiums are higher and that makes our credit more expensive.”

African countries continued to pay much higher interest rates as a result of this unfair system, Sall said.