AFRODAD pushes for fair debt ratings

By BUUMBA CHIMBULU

THE African Forum and Network on Debt and Development (AFRODAD) has underscored the urgent need to reform global credit rating agencies and their methodologies, calling it a critical step toward fairer assessments of African debt.
In her submission on the 4th International Conference on Financing for Development (FfD4), AFRODAD Policy, Advocacy & Research Officer for Sovereign Debt Management, Catherine Mithia, said calls for reform were echoed by African member states, plenary discussions, and notably by the President of Kenya.
“Credit rating agencies often unfairly assess African economies, resulting in downgrades that push borrowing costs significantly higher,” Ms Mithia said.
“Currently, African nations pay nearly eight times more than advanced economies to access international markets.”
She stressed the need for agencies to respect domestic debt sustainability analyses and reflect long-term debt viability in their assessments.
Such reforms, she said, would help reshape how African debt was perceived and support the broader overhaul of the global debt architecture.
Ms Mithia added that this presented an opportunity to accelerate efforts toward establishing an African credit rating agency—one that could offer an alternative to the dominant agencies – S&P Global Ratings, Moody’s and Fitch Ratings.
AFRODAD Executive Director Jason Braganza noted that the organisation’s central focus at FfD4 was to secure firm commitments on debt architecture reform.
“A key element is the creation of a legally binding intergovernmental process that leads to a UN Framework Convention on Sovereign Debt,” Mr Braganza said.
“Such a convention would outline the governance of debt restructuring and crisis resolution under the auspices of the United Nations.”
He criticised current global financial institutions, including the IMF and World Bank, stating they were “not fit for purpose” in managing sovereign debt challenges.
AFRODAD, he said, worked closely with the African Group of Member States at the UN to push for strong language on debt reform during negotiations.
The African Group introduced the proposal during the first round of talks in Addis Ababa in June 2024, with Burundi presenting on behalf of the bloc.
“At the regional and national levels, we supported the push by providing real-world examples – such as Zambia, Ghana and Ethiopia – to illustrate the failure of mechanisms like the G20 Common Framework,” Mr Braganza said.
He also cited more recent debt struggles in Senegal, Ivory Coast, Kenya and Malawi, noting that many countries have been forced to borrow more just to service existing debt – evidence, he said, of the urgent need for a new global debt governance model.