Fitch got it wrong on Afreximbank – the rating splits of international rating agencies expose their analytical flaws

For decades, the debate about rating agency biases against African countries has raged on. Scholars have produced extensive research proving these biases. Yet the rating agencies themselves have steadfastly maintained their claims of objectivity. There have been repeated circumstances of rating splits amongst the three major rating agencies – Moody's, S&P Global and Fitch. This describes a situation where credit rating agencies assign significantly different ratings to the same entity or country at a time. Although rating opinions among different agencies do not necessarily have to be aligned, a huge gap in ratings are suggest fundamental inaccuracies in the rating analysis. But even when a rating is wrong, it still drives financial markets in the wrong direction. This is one factor that have been driving Africa's cost of capital up. Given my decade of research on credit ratings in Africa, I argue that most of these rating splits prove that the rating agencies are not getting it right on assessments of African sovereigns and institutions. The recent case of African Export-Import Bank (Afreximbank) is a stark illustration of this problem.