The African Development Bank (AfDB) has signed a $700,000 Donor Contribution Agreement with United States government to develop a credit rating platform for Africa.
The agreement signed with Prosper Africa, a U.S. Presidential initiative, and the United States Department of the Treasury, is meant to reshape how international investors assess risk in African markets.
A statement by Beth Dunford, AfDB vice president for Agricultural, Human and Social Development, on Saturday said the grant will also help bolster the analytical capacity of regional member countries (RMCs) and improve their engagement with credit rating agencies.
The Credit Rating Online Data Platform will serve as an online data and analytical tool to tackle long-standing challenges in data accessibility that have historically led to skewed risk perceptions of African economies.
By helping to bridge the gap between perceived and actual investment risks in Africa, AfDB said the platform is expected to contribute to reducing the cost of funding for RMCs.
It added that many RMCs would benefit from a better understanding of the credit rating methodologies and analytical support in simulating credit ratings to enhance their discussions with agencies.
Addressing these data gaps and supporting analytical capacity building of RMCs would support efforts to accurately reflect country risk on the continent to the regional and international investor community, it said.
“The platform aims to provide high-quality, comprehensive, and timely information as a public good, which is critical to evidence-based policymaking. Accessible to sovereigns, credit rating agencies, investors, researchers, and other stakeholders, it will contribute to more accurate representation and evaluation of investment risks across the continent,” Dunford said.
Prosper Africa’s involvement underscores its mission to strengthen strategic and economic ties between the United States and Africa by catalyzing two-way trade and investment flows.
Since 2023, Prosper Africa has focused on reshaping investor perceptions of African markets to drive increased capital flows to the continent, with a particular emphasis on sovereign credit ratings.
Information asymmetries and the lack of timely, accurate, and comprehensive data have negatively impacted African sovereign credit ratings, making it challenging for RMCs to present a precise risk profile to investors.
Under the agreement, the African Development Bank will host and manage the data platform, ensuring quality assurance and leveraging its extensive network and expertise in data on African economies.
This partnership ensures strong African ownership while benefitting from the support and resources of Prosper Africa. The project aligns with the Bank’s Ten-Year Strategy (2024-2033) and ongoing efforts to enhance economic governance across Africa.
