“We are taking this step at the right time, when the world itself doesn’t know where it’s going”

In a significant step towards establishing Africa’s first independent credit rating agency, CARE Ratings (Africa) Private Limited (CRAF) and the African Peer Review Mechanism (APRM) signed a Memorandum of Understanding (MoU) last Thursday. The event marks the beginning of a new era for African finance, with the potential to reshape the continent’s economic landscape.

Speaking at the ceremony, Professor Eddy Maloka, CEO of the APRM, emphasised the importance of this initiative and the role that the African Union (AU) has played in bringing it to life. “We’re given this responsibility by our leaders in the African Union to set up this credit rating agency for Africa,” he stated. He noted that while the BRICS nations had been discussing a similar concept for over a year, the AU has now taken the lead. “The processes within the African Union have matured. The African Union has now taken a decision to set it up,” he added.

“We are taking this step at the right time, when the world itself doesn’t know where it’s going. At the United Nations, we can see the fragmentation. The Security Council, over the last few months, can’t agree on anything. Lots of things are changing. We are talking about this African credit rating agency when the world itself is in transition towards a new direction. So, the important thing that we should be telling ourselves as Africans sitting here today is that we are going into battle. It’s not going to be easy. And this battle does not only involve dealing with the dominant actors in the sector, who are going to try something. They will not welcome us, they may take certain positions, they may try to discredit our methodology, and they may try to discredit our intentions, our processes, and so on. But we are also going into battle against our own people. Because we have been taught to believe, as Africans, that things that come from us are inferior. That we should not talk our own indigenous language, and we should talk the language of somebody across the seas. And then you get respectability… So we are going into battle against mind-set and established dogma. We have to know that this is not going to be easy. But once we achieve this, we will have managed quite a serious and significant transformation of our continent. We are going to have to create and establish this body. And this body has to be here, and then it has to be launched here, in Mauritius. Next year, it must start doing its own work, releasing its own reports. We must go to the headquarters, we must go to our leaders, we must go to the spring meetings, and we must have our own flagship project. So we must really undertake an aggressive outreach on the continent to serve this institution. By doing that, by the time we get to the other side of the room, we will have changed the mind-set, we will have gained acceptability. Now people will be engaging us as partners, our reports will be taken seriously and will be able to answer your questions and make some of those things that are not possible today possible. We are going into battle, and it’s something that we really have to be prepared for as Africans. It’s happening at the right time, because the world itself is in transition to a new global order. We have to be at the centre of reforming and also shaping this new global order. This institution is part of that. It’s one of the key actors. That’s how we see it. It’s going to be a challenge. Africans, we work for a better Africa. We mean it. Nobody is going to deliver this to us on a single platform. It’s something that we have to work for,” Professor Eddy Maloka stated. 

I said to the Foreign Minister that we are still homeless

Professor Maloka reflected on the journey leading to this milestone, acknowledging the crucial support from Mauritius. “In this operational phase, we were very grateful that we met with our friends from Mauritius who said, ‘We want to help you. We want to work with you to set this thing up,’” he recounted. This collaboration is seen as a pivotal step in turning the concept into a reality.

Despite the progress made, Professor Maloka highlighted a significant challenge facing the project: finding a permanent location for the credit rating agency. “I said to the Foreign Minister that we are still homeless,” he revealed. While the APRM is hosted in South Africa, the new agency is intended to be independent from the APRM and the AU. “Our leaders are saying it must be independent. It must be separated from the African Peer Review Mechanism,” he explained.

This open question about the agency’s location offers an opportunity for AU member states to step forward. Mauritius, being a member of the AU and already involved in the initiative, could be a candidate. However, other nations, such as Ghana, also have a keen interest. Professor Maloka hinted at the possibility of various African countries expressing interest in hosting the agency, indicating a competitive but collaborative spirit.

As the process moves forward, the APRM is focused on the diplomatic aspect while relying on technical partners to bring the expertise required to set up the agency. “We are diplomats. We are not credit raters,” Professor Maloka pointed out, emphasising the need for technical guidance from experienced partners like CARE Ratings. He stressed that the partnership with CARE Ratings is not exclusive, inviting other entities across the African continent to join the effort.

Professor Maloka expressed optimism about the timeline for launching the agency. “We are hoping that we will be able to launch this entity in some internal form of some sort. And we are hoping that we can launch it before the end of this year,” he said. This ambitious target underscores the momentum behind the project and the strong commitment of the stakeholders involved.

With this MoU, Africa is taking a significant step towards creating its own credit rating system, which could have a profound impact on the continent’s economic growth and investor confidence. The independent nature of the agency is expected to offer a more nuanced and accurate perspective on African economies, potentially attracting greater investment and supporting sustainable development across the continent.