Ruto Calls For The Development Of African Credit Rating Agency
President William Ruto has advocated for the development of an African Credit Rating Agency, claiming that international credit rating agencies are defective and provide an unfair picture of the African economy.
In his address to the African Union’s 38th ordinary session in Addis Ababa, Ethiopia, Ruto criticized the biased review of African economies based on erroneous assumptions.
Furthermore, he stated that obsolete assumptions have resulted in inflated risks and unjustifiably high borrowing prices, as well as billions of wasted possibilities for the continent.
“The numbers tell a damning story. The Africa Peer Review Mechanism and the United Nations Development Programme place the cost of biased credit ratings at a staggering $75 billion in lost opportunities,” Ruto said.
President William Ruto: Global credit rating agencies have let Africa down. They paint a very unfair picture over our economies pic.twitter.com/m3eKkkNpKt
— Citizen TV Kenya (@citizentvkenya) February 14, 2025
Despite Africa’s immense natural resources, huge arable land, billions in remittances from the diaspora, and the world’s largest carbon sinks, credit rating agencies have delivered 94% of all downgrades in the past decade.
He underlined that they unilaterally categorized only two African countries as investment-grade.
He stated these prejudiced judgments come at a high cost not only to Africa, but to the entire globe, as they discourage investment, distort global trade, and undermine progress toward the Sustainable Development Goals.
“By misjudging Africa, these agencies deny opportunity to investors and economies and deprive nations of prosperity,” Ruto said.
Africa will no longer accept to be misjudged by the scales of global credit rating agencies that overlook our reality.
— William Samoei Ruto, PhD (@WilliamsRuto) February 14, 2025
By relying on flawed models, outdated assumptions, and systemic bias, these agencies have painted an unfair picture of our economies, leading to distorted… pic.twitter.com/WNRgh3QWOi
“The time has come to rewrite our history, reclaim our narrative, and charge the African Renaissance forward.”
The President’s words come just days after the African Union criticized Moody’s most recent upgrade of Kenya’s credit rating from negative to positive.
The African Peer Review Mechanism (APRM) said that the upgrading was an acknowledgment that the downgrading was premature in the first place, given that it skipped the stable outlook phase.
On January 24, Moody’s updated Kenya’s outlook from negative to positive and confirmed its Caa1 rating, noting a probable reduction in liquidity risks and improving debt affordability over time.
The APRM observed that it was unusual for a credit rating agency to change credit status from negative to positive while ignoring a stable outlook.
“The change is an admission, in remedy, that a negative outlook was an incorrect rating,” he added.
“This rating action was a reversal of Moody’s premature rating action on July 8, 2024 which was largely driven by protests in Kenya over the proposed Finance Bill.”
APRM stated that the July 2024 rating was speculative, citing midterm review data on the Appropriation Bill, spending allocations, final budget, and finance bill.
The rating agency made its announcement before the new cabinet was unveiled.
A Caa1 credit rating denotes low standing and very high credit risk, implying that a government is likely to fail on its debts.
In his speech to leaders of state and government, Ruto stated that the time had come for Africa to take its due place in shaping global progress to the full extent of its capacity and potential.
In establishing the African Credit Rating Agency, Ruto stated that the continent will seek partnerships based on shared principles of dignity, equity, and growth rather than working independently.
ALSO READ:
- Duale Confirms Kenya-U.S. Deal For Ebola Quarantine, Testing
- “Kenya Has Enough Fuel Reserve!” – CS Wandayi Assures
- Journalist Jailed In Ksh16 Million State House Case, Governor Intervenes
- Ruto’s UDA Fiercely Responds To Uhuru, Terms Him ‘Bitter And Obsessed’
- REVEALED: How Ruto’s UDA Plan To Infiltrate Gachagua’s DCP Party
“This agency must be globally credible and backed by rigorous, credible data and driven by high reporting standards from our own governments. But more importantly, it must reflect Africa’s reality correctly,” Ruto stated.
The President stated that the benefits of Africa establishing its own credit rating agency are enormous.
According to studies, a one-level improvement in Africa’s average credit rating would result in an additional $15.5 billion in loans.
“This alone would outstrip Official Development Assistance by 12 per cent and meet 80 per cent of Africa’s infrastructure needs. The opportunity is within our grasp, and we must seize it,” he said.
Ruto Calls For The Development Of African Credit Rating Agency
