The African Peer Review Mechanism (APRM), the Economic Commission for Africa (ECA) and the African Development Bank (AfDB) on Thursday virtually launched the first African Sovereign Credit Rating Review report that assesses credit rating trends in African countries in the first half of 2020.

The report examines the risk factors that have led to various downgrades in the face of the Novel Coronavirus (COVID-19); assesses their effects on public debt service costs; examines the consistency, objectivity and transparency of the rating process; and makes recommendations to African countries on how to avoid the resulting rating actions. and improve future ratings.

Many African countries have recently complained that credit rating agencies, which play a central role in the international financial sphere, are unfairly downgrading them. Member States are concerned about the effects of poor ratings of the three main international credit rating agencies - Moody's, Standard & Poor's and Fitch.

ECA affirms that policies are needed to ensure that Africa honours its debt obligations in a consistent, sustainable and transparent manner to avoid compromising credit ratings and adds that the time has come to redefine a new financial architecture to strengthen African financial markets in a way consistent with Agenda 2063 and the 2030 Agenda for Sustainable Development.

Both organizations argue that while the rating issue is real, there is also an urgent need for African countries to be transparent in the contracts they enter into to avoid negative ratings.

ECA remains committed to continuing to work with the APRM, the African Union Commission and others on the issue of credit ratings and to help redefine a new financial architecture for Africa. The APRM is a specialized entity of the African Union.

Those who spoke at the launch of the report, including representatives of ECA, APRM, IMF and the African Union Commission, welcome the report which they believe will help policymakers in Africa engage more effectively in rating processes by setting up diversely competent liaison teams of experts for engage rating agencies in rating reviews; develop and strengthen legislative frameworks for credit rating agencies to be registered in their jurisdiction in order to provide rating services, among other things.

The African Sovereign Credit Rating Review Report aims to provide African countries and investors with a relevant analysis of the views issued by international agencies on sovereign credit. The report presents trends, determinants, interpretation of opinions and policy recommendations on sovereign credit ratings.

Eleven countries were downgraded at the height of COVID-19. These are Angola (twice), Botswana, Cameroon, Cape Verde, Ethiopia, Gabon, Nigeria (twice), Seychelles, Tunisia, South Africa (three times) and Zambia (three times). Twelve countries experienced a negative evolution of their sovereign rating outlook, indicating a risk of downward revision in the short and medium term.