President Bola Tinubu has urged reform of the global financial architecture, stating that African nations face excessive borrowing costs due to persistent misjudgements by major international credit rating agencies.
In an opinion article, Tinubu contended that Africa pays too much to borrow, highlighting the “Africa premium”—a gap between perceived risk and economic reality—as a critical issue. He noted that the assessments of Fitch, Moody’s, and S&P Global Ratings significantly influence investor behaviour and capital access for the continent, yet often fail to capture local conditions.
According to analysis from the United Nations Development Programme, these rating distortions cost Africa approximately $75 billion annually through higher interest payments and reduced lending opportunities. Tinubu pointed out the disparity between this high-cost environment and economic projections; the International Monetary Fund anticipates Africa will be the world’s fastest-growing region this year, yet only three African countries currently hold investment-grade ratings.
He proposed the establishment of an African credit rating agency as a necessary corrective, citing the limited on-the-ground presence of existing global firms. Tinubu explained that their models combine quantitative data with subjective judgements on political and institutional risks, processes he described as opaque and often disconnected from local realities. This can lead to pro-cyclical downgrades, particularly for commodity-dependent economies during global price slumps, which then become self-fulfilling by raising borrowing costs.
As a case study, Tinubu referenced Nigeria’s recent credit upgrades, linking them to improved data transparency—such as consolidating central bank debt and rebasing GDP—and bold policy reforms including fuel subsidy removal and exchange-rate liberalisation. These measures, he wrote, supported non-oil growth and economic diversification. Nevertheless, he noted Nigeria’s ratings still lag behind reform progress and investor appetite, evidenced by strong bond market subscriptions.
A continental agency, Tinubu argued, could provide real-time recognition of reform momentum, reducing delays that hinder market access after policy shifts. He stressed such an institution must build global credibility through reliable, transparent data.
The proposal underscores a broader demand for a level playing field as Africa’s demographic weight grows; by mid-century, the continent is projected to host a quarter of the world’s working-age population. An African ratings body could offer an early signal of progress, complementing—rather than replacing—established global agencies, and help align capital allocation with the continent’s actual economic trajectory.
