Why rating agencies are resisting changing their business approach in Africa

The three dominant international credit rating agencies – Moody’s, Fitch and S&P – have been challenged on instances of omitting material information in the assessment of creditworthiness of African countries. Some analysts have argued that the omission of key information is a deliberate conservative approach to keep ratings in Africa low and maintaining their market power. Others have associated these omissions with lack of understanding of the domestic macroeconomic context of Africa by the rating agencies. The several errors made by the rating agencies in their commentaries, reports and announcements are proof of fundamental defects that still exist in organisational internal control mechanisms and structures. This has prompted critics to argue that the agencies are not putting sufficient effort to either understand African economies or address weak internal systems for their continent’s operations.