Time for Africa to create own narrative about creditworthiness
JACK ZIMBA
Lusaka
THE International Credit Rating Agency (ICRA) has backed the call by President Hakainde Hichilema for Africa to have its own credit rating agency to ensure fair and objective assessments.
Most African countries are rated by international rating agencies like Moody’s and Standard, Poor’s and Fitch.
Mr Hichilema made the call last week during a presidential breakfast meeting on the establishment of the Africa Credit Rating Agency (AfCRA) at the African Union headquarters in Addis Ababa, Ethiopia.
President Hichilema said the agency will help address structural biases in global credit assessments and enhance Africa’s ability to attract investment on competitive terms.
Commenting on the President’s call, ICRA director for Africa operations David Mwambazi said it is time for Africa to create its own narrative in as far as credit rating is concerned.
ICRA is a multinational credit rating agency headquartered in Dubai, United Arab Emirates, with a growing presence in Africa. In Zambia, the agency is regulated by the Securities and Exchange Commission.
Mr Mwambazi commended President Hichilema for championing the creation of the Africa Credit Rating Agency.
He said the lack of an African credit rating agency has disadvantaged the continent in many ways, such as failing to attract favourable finance from the international capital markets.
“Even attracting the right investments is usually a challenge because everybody thinks Africa is high-risk because we are not really telling our strengths as a continent,” he said.
Mr Mwambazi said Zambia and other African countries must learn from Zimbabwe, which has strong credit rating policies.
He said despite Zimbabwe being under economic sanctions for a long time, its financial institutions have remained strong, owing to strong credit rating policies enforced by the Reserve Bank of Zimbabwe.
These include making credit rating mandatory for financial institutions.
“Very few economies in Africa can withstand the pressure that the Zimbabwean economy has withstood. But, despite that, you find that the financial institutions are solid and more asset-rich than most African countries that are not experiencing some of the challenges that Zimbabwe is going through,” he said.
He said there is also need for Africa to reset its priorities, consideration the repositioning of the United States of America under Donald Trump, such as the withholding of international aid.
“Countries like Zambia will now have to showcase their strength in some of the institutions so that we have a situation where people are not coming to Zambia to give us aid but to bring investment,” he said.
He said this can only happen with a strong credit rating.
“I would like to encourage our banks to be rated because all these surprises that are happening where people wake up and the bank is closing, investors and even just individuals will be shying away from putting monies in some of these financial institutions. Let us encourage transparency,” he said.
Mr Mwambazi said it is encouraging that financial institutions operating in Zambia are realising the importance of being rated by a local credit rating agency.
