By Dr. Macharia Kihuro
In a latest public assertion, the African Export-Import Financial institution (Afreximbank) introduced it might terminate its credit standing relationship with Fitch Rankings. The rationale for this choice was notably placing. The financial institution attributed the transfer to its “agency perception that the credit standing train now not displays an excellent understanding of the Financial institution’s Institution Settlement, its mission, or its mandate.” It additional emphasised that its enterprise profile stays “strong, underpinned by robust 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 ranking businesses apply a single, inflexible methodology to all banks, or ought to their strategy be tailored to the precise nature of the establishment? Extra exactly, ought to a industrial financial institution be assessed utilizing the very same framework as a multilateral growth financial institution (MDB)? Afreximbank contends that Fitch Rankings didn’t account for this essential 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 Ranking Standards,” employs a two-part framework for each industrial banks and MDBs. The primary is a Core Quantitative Mannequin (CQM), a standardized formulation calculating a “Viability Ranking” primarily based on monetary metrics like asset high quality and capital adequacy. This serves because the preliminary anchor. The second element is the “Assist Ranking” 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 underneath its Institution Settlement that’s thought-about extraordinarily robust and dependable. For prime-quality MDBs, Fitch usually makes use of a “credit score substitution” strategy, anchoring the MDB’s ranking 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 ranking 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 in opposition to African monetary establishments.
This confrontation forces a essential examination of tolerating tensions in world finance: Are worldwide ranking businesses’ methodologies inherently biased in opposition to African establishments? Or did Afreximbank misunderstand the framework and overreact? Finally, the central query considerations real-world impression: What would be the penalties of this dispute for the financial institution, the continent’s monetary structure, and the credibility of worldwide ranking requirements?
Is Afreximbank an remoted case? Emphatically, no. A longstanding and widespread sentiment throughout Africa holds that the methodologies of the “Massive Three” ranking businesses (Fitch, Moody’s, and S&P) are systematically biased, fail to account for distinctive regional contexts, and produce unfairly punitive scores. The businesses provide strong 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 businesses, 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 selections. Among the many most vocal critics is the African Improvement 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 essential classes. A substantive drawback has been recognized: the persistent hole between company assessments and consumer 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 guaranteeing 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 essential. By way of 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 robust governance, demanding readability on how qualitative elements are scored.
Dr. Macharia Kihuro (PhD) is a growth finance knowledgeable with in depth expertise throughout Sub-Saharan Africa.
