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Title: International credit rating agencies in Africa: perceptions, trends and challenges

Authors: Misheck Mutize; McBride Peter Nkhalamba

Addresses: African Peer Review Mechanism, 230 15th Rd., Midrand, Johannesburg, South Africa ' African Peer Review Mechanism, 230 15th Rd., Midrand, Johannesburg, South Africa

Abstract: This research examines the perceptions, trends and challenges of the influence of international rating agencies on national economic affairs in African states. A descriptive analysis of independent reports published on international sovereign credit ratings and a survey on the financial bodies of the African Union as well as consultations with the three international credit rating agencies show that there is diminishing confidence in operations rating agencies in Africa. However, despite the criticisms of deficiencies in methodologies, operations and regulation of credit rating agencies, results show that they significantly remain as the best available source of credible of risk information for emerging economies to access international capital. It is therefore concluded that the information manufacturing and opinion-leading role of rating agencies remain critical to capital flow and economic development. Thus, the study recommends that African countries implement a multi-stakeholder approach to engagement rating agencies on reviewing the methodologies, indicators and the rating process as traditional methods and indicators are discounting the potential embedded in emerging economies resulting in poor credit ratings.

Keywords: credit rating agencies; capital flow; Africa; regulation; international capital.

DOI: 10.1504/IJSE.2021.113303

International Journal of Sustainable Economy, 2021 Vol.13 No.1, pp.55 - 71

Received: 22 Apr 2020
Accepted: 27 Jun 2020

Published online: 19 Feb 2021 *

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