African countries pay about $74.5 billion each year through excessive borrowing costs and lost financing because sovereign credit ratings are inaccurate and fail to reflect local context, the United Nations says.
The assessment was disclosed by the UN Office of the Special Adviser on Africa shortly before the formal launch of the Africa Credit Rating Agency, known as AfCRA, in Port Louis, Mauritius. AfCRA was formally launched on 7 October.
The African Union has pursued a homegrown alternative to the major international rating agencies since 2017. It designed AfCRA to break the near-total monopoly held by established Western agencies including Moody's, S&P and Fitch.
The central dispute is over the price assigned to risk. The UN says Africa's actual default rate is far below the level suggested by its ratings, even as the continent pays the highest cost of capital in the world.
AfCRA is expected to assess sovereigns, sub-sovereigns, companies and institutions through independent, Africa-focused methods. Its approach is intended to be more transparent and to better reflect the complexity of African economies.
The agency plans to use richer data, including credible estimates of informal-sector activity, while placing less outsized reliance on gross domestic product alone. It is also intended to help reshape the credit-ratings system by dismantling historical biases in assessments of African sovereigns.
The UN's estimate includes $14.2 billion in excess interest on domestic debt, $28.3 billion in unwarranted premium yields on Eurobonds and approximately $30.9 billion in potential development funding lost because governments cannot secure investment-grade ratings.
Nigeria has repeatedly raised the issue at the UN, arguing that African sovereign borrowers face a disproportionate risk premium.
At a special Economic and Social Council meeting on credit ratings in March, Nigeria compared its borrowing costs with those of an unnamed, highly indebted European economy. Nigeria said its debt-to-GDP ratio was considerably lower, it had never defaulted on sovereign debt and its foreign reserves were stronger.
Its recent dollar-denominated sovereign bonds nevertheless carried yields of between 8.6 and 9.1 per cent.
There have also been signs of reassessment. Benin, Cabo Verde, the Republic of Congo, Côte d’Ivoire, Egypt, Ghana, Guinea, Kenya, Madagascar, Morocco, Rwanda, Seychelles, South Africa, Tunisia and Zambia all received sovereign rating upgrades over the past year.
In late 2025, Angola, Kenya, Nigeria and South Africa together raised more than US$9 billion in international bonds. The African Development Bank and the International Monetary Fund project Africa-wide growth of around 4 percent in 2026.
AfCRA's launch gives the African Union an institution built for a long-running argument over how African economies are judged. Its practical test will be whether its assessments gain standing among the investors whose decisions set borrowing costs.
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