Debt, Ratings, and the “Dollar Weapon”: Africa Challenges the Global Financial Architecture

For decades, African economies have operated within a system of rules established without their participation.

The Price of the “Africa Premium”: $74.5 Billion a Year

The main grievance of African leaders toward the global financial architecture is the systemic injustice in credit risk assessment. Three agencies—S&P Global Ratings, Moody’s, and Fitch Ratings—control about 93% of the global credit rating market. Their methodologies, Africa argues, fail to account for the realities and potential of the continent.

The numbers speak for themselves. With one of the lowest default rates in the world, Africa pays at least three times more for borrowing than developed economies. Of 54 African countries, only two have an investment-grade rating. Ahunna Eziakonwa, UN Under-Secretary-General and Special Adviser on Africa, estimates the continent’s annual losses from inflated risk assessments and biased ratings at $74.5 billion. “If we reduce borrowing costs by just 2% over three years on a portfolio of $18.6 billion, Africa could save about $1.12 billion—enough to provide electricity to 50 million people or hire 900,000 teachers,” she emphasized.

Nigerian President Bola Tinubu, in an op-ed for the Financial Times, called this phenomenon the “Africa premium”—the gap between the actual state of economies and their assessment by global rating agencies. In his words, the methodologies of the “Big Three” suffer from limited on-the-ground presence: “How these judgments are reached and what weight they are given remain within the opaque discretion of analysts. Conclusions drawn from afar do not reflect local realities.”

Former Ghanaian President Nana Akufo-Addo went further, calling the existing practice “unfair”: countries with similar economic indicators receive more favorable ratings simply because they are not in Africa. “We are forced to pay higher risk premiums based on biased assessments,” he stated.

The “Big Three” agencies deny allegations of regional bias, insisting that their evaluations are based on widely accepted global methodologies and publicly available economic data. However, counterarguments carry weight. Sim Tshabalala, CEO of Standard Bank, points out that Côte d’Ivoire has a rating similar to Serbia’s, but its debt trades roughly 50 basis points more expensively. South Africa, by his estimate, has a BB- rating while its fundamentals........

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