The international credit rating agency upgraded Rwanda to ‘B+’ from the ‘B’ rating it had previously given the East African state earlier this year.
“Rwanda certainly has been one of Africa’s great success stories. There are two main reasons why we took the decision to upgrade Rwanda, the first being a track record of prudent and coherent fiscal on monetary policy and the second is Rwanda really has a stellar growth record,” Carmen Altenkrich, Director Sovereign Group at Fitch told CNBC Africa.
The country also saw the issue ratings on its senior unsecured foreign and local currency bonds as well as its Country Ceiling upgraded to ‘B+’ from ‘B’.
“Over the past five years, Rwanda has been able to grow at 6.9 per cent on average annually which really makes it a very strong growth story,” Altenkrich said.
According to the latest, United Nations Human Development Report, Rwanda recorded the fastest growth in Africa between the years 2000 and 2013.
Fitch anticipates Rwanda’s real GDP growth to be 6.5 per cent and to increase by 0.5 to 1.5 per cent in the medium term, in line with performance during the previous decade. According to the rating agency, the growth will benefit from stronger local integration within the East African Community and speedy gains in agriculture, mines, tourism and services.
In May 2014 the East African nation was floated with 15 billion Rwandan Franc, twice the amount and issued at a yield of 12.25 per cent. In 2013, Rwanda became the first East African country to have issued a Eurobond, raising 400 million US dollars.
Rwanda’s short-term foreign currency IDR was affirmed at ‘B’.
Meanwhile, Fitch Ratings affirmed Kenya’s Long-term foreign rating at ‘B+’, reflecting the five-year average growth rate.
The international credit rating agency based in the United States and the United Kingdom bases its ratings on factors including how small an economic shift would be necessary to affect the standing of a bond issuance and what kind of debt is held by the company or country.
“We have had some good and bad news. On the positive said we have seen the current account deficit which ran in double digits for the past few years coming down to 7.8 per cent of GDP. We have also seen the government take more decisive steps towards addressing the business environment and come September we are also anticipating a 20 per cent increase in the GDP,” Altenkrich said
According to Altenkrich, the country’s weak governance remains a constraint on Kenya’s sovereign credit ratings including Kenya’s lower per capita income in comparison with nations of similar rating as well as weaknesses in business environment and human development.