How the coordination failure between credit ratings and investors is costing Africa

Credit rating profiles of African countries have generally been deteriorating over the past decade. Six out of eight countries have lost their investment grade rating and are now classified as sub-investment grade or ‘junk’ status. A simple interpretation of this is that ‘the creditworthiness of Africa is declining’. It can be argued that a key contributing factor to this development is a coordination failure of credit rating agencies and the financial markets, rather than an intrinsic decline of the creditworthiness of African countries. Other indicators of socio-economic and human development indices have significantly improved.