Does Africa need its own credit rating agency?

On the side-lines of the African Development Bank's Annual Meetings, CNBC Africa’s Fifi Peters caught up with Titus Nampala, Head of Africa Financials & Sovereigns at RMB, to delve into the state of creditworthiness of African economies and the potential for a dedicated African credit rating agency. Titus Nampala reflects on the ongoing conference, emphasizing the resilience of African markets amidst the uncertainties of the global pandemic. He highlights the importance of understanding the credit risks in African sovereigns and the need for a comprehensive assessment of the financial markets in the continent. Nampala expounds on the necessity of an African voice in shaping credit metrics and enabling investors to grasp the nuances of the African markets. He underscores the significance of engaging investors worldwide to foster a deeper understanding of the continent's financial landscape. Amidst the buzz of the conference, he notes a notable interest from various global investors keen on exploring opportunities in Africa. The discussion shifts towards the concept of Africa having its own credit rating agency, with Nampala acknowledging the potential benefits but also stressing the need to assess the unique value proposition it would bring. He emphasizes the importance of comprehending the underlying factors that contribute to credit ratings and advocates for a holistic approach to evaluating credit metrics across all rating agencies. Nampala asserts the primary goal is to ensure that investors fully grasp the credit risks in African markets, irrespective of the rating agency involved. Delving into the credit quality landscape, Nampala points out the resilience of African sovereigns amidst the pandemic-induced challenges. He cites positive developments in countries like Ghana, Benin, and Kenya, highlighting the commendable efforts of governments in stabilizing their economies. Notably, he mentions the recent change in outlook for South Africa by a major rating agency, signifying a positive trajectory for the country. As global economic threats loom, Nampala discusses the varying impacts on African nations, particularly oil producers and importers. He underscores the importance of economic diversification to enhance resilience to external shocks, emphasizing the need for sustainable financial strategies. Nampala advocates for partnerships with international stakeholders to facilitate climate finance initiatives, addressing the $1.6 trillion finance gap estimated by the African Development Bank. In concluding remarks, Nampala highlights the abundance of capital seeking investment opportunities in Africa and emphasizes the critical role of structured deals and instruments in bridging the climate finance gap. He expresses confidence in the capability of the market to attract investments for sustainable development initiatives, underlining the importance of collaboration between sovereigns and investors.