President William Ruto has joined calls for fairer reviews of African economies including Kenya’s by global credit rating agencies, saying their sentiments are pushing borrowing costs higher at a time when many economies are grappling with a tough operating environment.
Speaking on Thursday during the Global Africa Business Initiative in New York, President Ruto said that ratings by entities such as Standard and Poor’s, Moody’s, and Fitch are not fair and place African economies at a disadvantage when tapping into the global markets to raise capital.
“As much as we are talking about the credit rating agencies and risk analysis, we don’t want them to be defensive because they know what we are saying is right. They know we are talking the truth and they know the whole issue around credit ratings is not fair and all we are saying is that it is not too much to ask for fairness. We just want a fair system that serves everyone equally,” Dr Ruto said.
The President’s remarks came two months after the African Union (AU) took a swipe at the review decisions by the rating agencies in six months ended June 2023. In this period, 13 negative credit ratings were taken by Moody’s, Fitch, and Standard & Poor’s about African economies, seven of which were downgrades while six were negative changes in outlook. The AU now says it is considering developing its credit rating tool to help correct what it deems as “errors” by foreign-based credit rating agencies.
“Moody’s, Fitch, and S&P continue to make significant errors in their ratings, yet they continue to influence global financing decisions and flow of capital. Unlike in the first half of 2022, rating actions in the first half of 2023 were predominantly negative, with no single African country being upgraded during the period.
This view has been backed by the United Nations Independent Advisor on sovereign debt, Prof Attiya Waris, who says that ratings by ‘the big three’ often lack on-ground nuances to capture the real macroeconomic developments in African economies.