President Hakainde Hichilema has called on African countries to speed up the process of operationalising the African Credit Rating Agency whose implementation will leverage the continent’s opportunity in the global financial architecture.
President Hichilema stated that Africa should not shy away from the fact that the continent has not been treated fairly in the global finance world and it was time Africa spoke for itself to redress the imbalance that has been going on for a long time.
The Head of State said there is need to undertake practical steps to redress the situation which would require political commitment and walk in the realisation of the creation of the African Credit Rating Agency.
President Hichilema stated that African countries have had to pay high costs especially when it came to short term capital which was crippling and damaging viable businesses.
ZANIS reports that the President was speaking during a Presidential Breakfast on the African Credit Rating Agency whose theme was Securing Africa’s Financial Future and was organised by the African Peer Review Mechanism at the African Union (AU) headquarters in Addis Ababa, Ethiopia.
“Let’s say other things are equal, other things being equal, and the only thing you are left to assess the viability of the project is the cost of capital. Many times, that project will not see the light of the day because that variable called the cost of capital is too high. Compare that project on our continent with another project in the different continents,” said the President.
He added that it was contrasting that in Africa, businesses failed on account of the cost of viable business capital as the continent’s economies were down owing to the cost of capital.
President Hichilema said the actualisation of the African Credit Rating Agency has come at a better time so that some of the challenges are addressed to make investment meaningful.
“I’m focusing on investment expenditure, projects that will lead to growth of our economies, and not just growth but accelerated growth so we can create jobs for our youthful population on the continent, number one. Further there is a need to create business opportunities in the supply chain for public sector, private sector, micro, small, medium, large businesses. I think these are the issues we must be conscious of as to what is the motivation which has brought us to this breakfast meeting,” he pointed out.
President Hichilema cited the drought that affected the country saying had Zambia made the right decisions such as investment in irrigation to produce more food and generate enough power, it would have averted its consequences.
The Head of State said the continent must be expansionary in mind and not allow restrictions if bigger projects are to be realised.
“And we recognised that we needed to invest more in generation, but also in transmission. So you can evacuate power from the generating point to the consumption point or demand point. These are huge projects,” he said.
Speaking earlier, African Union Commission Deputy Chairperson Monique Nsanzabaganwa, said there was need for a rating framework that considers the true fundamentals of African economies, including the impact of regional integration, the resilience of the informal sectors, and Africa’s growing financial and technological innovations.
Dr Nsanzabnag added that it was also important the agency is internationally recognized and accepted instead of it being an isolated entity.
“It should work closely with global financial institutions, multilateral development banks, and investors alike to build credibility and ensure that its ratings are respected in international markets. An African-led credit rating agency will not only provide more balanced assessments of sovereign and corporate credit worthiness, but will also empower African nations to negotiate better terms in global financial markets,” said the AU Chairperson.
Dr Nsanzabanga further said the initiative of the credit agency aligns perfectly with the objectives of the African Continental Free Trade Area, the FCFTA, as it will foster a more integrated and financially self-reliant Africa capable of mobilising its own resources for development.
She said in order to make the FCRA a success, there was a need for a strong political commitment from African governments to support and promote the agency.
“The establishment of the Africa Credit Rating Agency is a bold and necessary step towards a future where Africa is no longer defined by external perceptions but by its own realities and ambitions. As we deliberate on the roadmap for our African Credit Rating Agency, let us be guided by a shared vision of an Africa that is economically empowered, financially sovereign, and globally respected,’’ she reminded the gathering.
And Ethiopian President, Taye Atske Selassie said it was pleasing that the African Development Bank latest report has disclosed that Africa is the second fastest growing continent with more than a dozen African countries being among the world’s 20 fastest growing countries.
President Selassie however said despite the progress made, the international rating agencies have often presented a distorted and unhelpful view of our economies as their assessments are characterised by unpredictability and inconsistency.
“The lack of objectivity on credit rating of our economies, on the one hand, has severely hampered our ability to access capital, and on the other, limited our capacity to integrate with the global financial system. Consequently, this lopsided perception has hindered our journey to achieve structural economic transformation and sustainable development,” he pointed out.
The Ethiopian leader added that as Africa’s economy demonstrates resilience and continues its upward trajectory in the post-COVID era, an African credit rating system is more critical than ever in sustaining the momentum of the continent’s growth and progress.
Meanwhile, Kenyan President William Ruto, during the same meeting reiterated the need for the continent to rewrite its own history and reclaim the narrative and charge the African Renaissance forward.
He said the whole purpose of gathering in Ethiopia was to redress Africa’s economic potential is being hamstrung by a financial system that misrepresents, distorts and understates the reality because Global credit rating agencies have deliberately failed Africa.
‘’They rely on flawed models, distorted and outdated assumptions, and systemic bias, painting an unfair picture of our economies and leading to distorted ratings, exaggerated risks, and unjustifiably high borrowing costs. Let me say this again. Global credit rating agencies have let us down,” he told the meeting.
President Ruto disclosed that the Africa Peer Review Mechanism and the United Nations Development Programme has placed the cost of biased credit rating at a staggering US$75 billion in lost opportunities.
“A system that punishes our economies while rewarding others, even when the fundamentals are comparable, in some cases even better. Excellences, the foundations of global finance are supposed to be anchored on principles of fairness, transparency, and merit. Yet, these principles are disregarded when it applies to Africa,” he said.
President Hichilema is in Ethiopia to participate in the 38th African Union (AU) Summit, where he is scheduled to engage in bilateral discussions with fellow Heads of State and Government, as well as meet with business leaders and key industry players.
The African Union Theme of the Year 2025 is focusing on Reparatory Justice and Racial Healing Under the Theme: “Justice for Africans and People of African Descent Through Reparations”.
