By Dr. Macharia Kihuro
In a latest public assertion, the African Export-Import Financial institution (Afreximbank) introduced it could terminate its credit standing relationship with Fitch Scores. The rationale for this resolution was notably hanging. The financial institution attributed the transfer to its “agency perception that the credit standing train not displays a superb understanding of the Financial institution’s Institution Settlement, its mission, or its mandate.” It additional emphasised that its enterprise profile stays “sturdy, underpinned by sturdy shareholder relationships and the authorized protections embedded in its Institution Settlement” which is a treaty signed and ratified by its member states.
On the core of this disagreement is a long-simmering debate: ought to score companies apply a single, inflexible methodology to all banks, or ought to their strategy be tailored to the particular nature of the establishment? Extra exactly, ought to a industrial financial institution be assessed utilizing the very same framework as a multilateral improvement financial institution (MDB)? Afreximbank contends that Fitch Scores didn’t account for this vital distinction, producing an evaluation the financial institution views as an unfair misrepresentation of its true credit score standing.
Fitch’s methodology, as outlined in its “Financial institution Score Standards,” employs a two-part framework for each industrial banks and MDBs. The primary is a Core Quantitative Mannequin (CQM), a standardized system calculating a “Viability Score” based mostly on monetary metrics like asset high quality and capital adequacy. This serves because the preliminary anchor. The second part is the “Help Score” framework, the place exterior assist is evaluated. Right here, theoretically, the excellence is made: for MDBs like Afreximbank, assist is assessed because the collective, contractual dedication of its member states beneath its Institution Settlement that’s thought-about extraordinarily sturdy and dependable. For top-quality MDBs, Fitch usually makes use of a “credit score substitution” strategy, anchoring the MDB’s score to the creditworthiness of its strongest shareholders.
The pivotal rupture occurred on January 28, 2026, when Fitch downgraded Afreximbank to ‘BB+’ from ‘BBB-‘ and subsequently withdrew all scores. This motion pushed the financial institution’s long-term issuer default score into non-investment grade (“junk”) territory. Afreximbank responded decisively by terminating the connection, stating it seen the company’s methodology as flawed, damaging to its mission, and indicative of a broader bias towards African monetary establishments.
This confrontation forces a vital examination of putting up with tensions in international finance: Are worldwide score companies’ methodologies inherently biased towards African establishments? Or did Afreximbank misunderstand the framework and overreact? Finally, the central query issues real-world influence: What would be the penalties of this dispute for the financial institution, the continent’s monetary structure, and the credibility of worldwide score requirements?
Is Afreximbank an remoted case? Emphatically, no. A longstanding and widespread sentiment throughout Africa holds that the methodologies of the “Large Three” score companies (Fitch, Moody’s, and S&P) are systematically biased, fail to account for distinctive regional contexts, and produce unfairly punitive scores. The companies supply sturdy counter-arguments, making a traditional “dialogue of the deaf.”
Ghana has frequently contested downgrades. In 2022, after a sequence of downgrades to “junk” standing, its authorities suspended formal engagement with all three main companies, accusing them of pro-cyclical actions that worsened its debt disaster. Notably, Fitch’s rationale for Afreximbank’s latest downgrade was anchored in Ghana’s 2023 debt restructuring, making use of a precept that hyperlinks an MDB’s threat to its member states.
Kenya, Rwanda, Nigeria, and South Africa have all formally appealed scores choices. Among the many most vocal critics is the African Growth Financial institution (AfDB), whose former President, Akinwumi Adesina, spearheaded a high-profile marketing campaign condemning worldwide credit score scores for African nations as “arbitrary, biased, and subjective.”
This debate yields vital classes. A substantive drawback has been recognized: the persistent hole between company assessments and shopper realities, exacerbated by a communication breakdown. This isn’t an remoted incident however a continent-wide problem.
The trail ahead calls for concrete motion. Stakeholders should collaborate to construct a system making certain each equity and credible threat evaluation. This rupture exposes a worldwide structure failing to adequately incorporate rising market views. That friction should now catalyze a real dialogue, resulting in mutually accepted methodologies. Moreover, collective motion is vital. By the African Union or different pan-African platforms, a unified bloc ought to negotiate for tailor-made, publicly disclosed standards for African MDBs and sovereigns with sturdy governance, demanding readability on how qualitative elements are scored.
Dr. Macharia Kihuro (PhD) is a improvement finance knowledgeable with intensive expertise throughout Sub-Saharan Africa.
