Africa needs its own credit rating agency: here’s how it could work

Credit ratings are important for developing economies in Africa Wikimedia Commons

The credit rating industry in Africa is dominated by the three international agencies: Moody’s, S&P and Fitch. Together they control an estimated 95% of the credit rating business globally.

Credit rating agencies are institutions that assess a borrower’s creditworthiness in general terms, or with respect to a particular debt or financial obligation. A credit rating can be assigned to any entity that seeks to borrow money – an individual, a corporation, a state or provincial authority, or a sovereign government. Investors use a credit rating to make decisions about risk and return. So the rating is required if an institution wants to raise funds on financial markets.