Policymakers gathering at the Africa Forward Summit will focus on ways to rethink how to price risk on the continent and unlock investment, Kenya’s foreign minister told Reuters. African leaders have long argued that global credit rating agencies overstate the continent’s risk, pushing up borrowing costs and deterring investment.
Musalia Mudavadi said the presence of global and regional lenders at the two-day event in Nairobi — including the European Bank for Reconstruction and Development and the African Development Bank — would support attempts to tackle the risk perception. “This dialogue should help produce better financing mechanisms to support Africa,” he said. Mudavadi also described the African Union’s aim to set up a continental credit ratings agency to provide a more accurate assessment of African risk as a “critical” effort.
Global ratings agencies face growing criticism for relying on offshore models that some African policymakers say misread local realities. The debate was thrust into the spotlight this year when Afreximbank severed its ties with Fitch.
