Nairobi, 17 July 2023 (ECA & APRM) - In efforts to improve and maintain good credit ratings, experts from the African Peer Review Mechanism (APRM), the United Nations Economic Commission for Africa (ECA) and the Agence Francaise de Development (AFD) hosted a three-day knowledge-sharing workshop to drive Africa's sovereign credit rating agenda.

The peer-to-peer exchange attracted a myriad of professionals and experts to harness their knowledge of rating agencies, catalyze collaboration, and stimulate innovation to drive the continent's credit rating agenda.

In his opening, McBride Nkhalamba on behalf of Eddy Maloka, CEO of the APRM Continental Secretariat, stated that regulatory shortfalls are becoming increasingly obvious, and require an immediate response from the national regulatory bodies.

Experts underscored the need for proper oversight mechanisms as well as the creation of a favourable regulatory environment to encourage competition and reduce entry barriers for new credit reporting agencies.

They further acknowledged that affordable and easily accessible credit rating services can facilitate the development of the private sector in Africa with a point of reference to the Capital Markets Authority of Kenya, which has reviewed its credit rating regulatory framework and aligned it with its needs and aspirations including towards the private sector.

As experts explored ideas to drive this continental agenda, the Chief Executive Officer (CEO) of the Uganda Capital Markets Authority in his remarks to regulators called for greater transparency to minimize conflicts of interest during regulations.

With experiences from Ethiopia, Ghana, Kenya, Malawi, Mauritius, Namibia, Nigeria, South Africa, Tanzania and Zambia on best practices and challenges with regulatory frameworks in the credit rating industry, experts suggested as a key recommendation, the establishment of subcommittees to address the different work areas outlined in the terms of reference of the network of regulators.

Featured during this peer-to-peer exchange was the need for transparency in data dissemination which is critical in the credit rating process.

Ms Lusine Lusinyan, Deputy Division Chief in the Strategy, Standards, and Review Division Statistics Department at IMF presented the organization's Data Standards Initiatives. In her presentation, she emphasized that "Countries inform markets and the public promptly, which facilitates early resolution of the crisis by preventing hidden build-up of vulnerabilities and imbalances".

The African Union Institute for Statistics presented the data support program of the continental body. The Experts also touched on the initiative to create an African Credit Rating Agency (ACRA) with deliberations on the legal, financial and structural implications.

Ms Sonia Essobmadje, Chief, Innovative Finance and Capital Markets Section, Private Sector Development and Finance Division, ECA, stressed the importance of member states telling their own narrative to the market by engaging directly with key partners and investors, opening a channel of communication with the market for to a better understanding of a government's challenges and actions.

The APRM and ECA, like other international jurisdictions, have established an African Network of National Regulators on Credit Ratings to develop a common regulatory framework and guidance on in-country and cross-border credit rating agencies.

Issued by:

Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Ethiopia
Tel: +251 11 551 5826
E-mail: [email protected]

Source: UNECA