Latest news with #APRM
Zawya
20-07-2025
- Business
- Zawya
Bridging Africa's financing gaps through better planning
With just five years left to meet global and continental development targets, African governments are shifting the way they plan and finance national priorities. The focus is turning toward long-term, integrated planning that links policy ambition with realistic budgeting and resource strategies. This evolving approach was the focus of a side event at the High-Level Political Forum (HLPF), co-organized by the African Peer Review Mechanism (APRM), UN DESA and the UN Economic Commission for Africa (ECA). The session explored how African countries are applying future-oriented planning methods to address persistent financing challenges and accelerate progress on the Sustainable Development Goals and Agenda 2063. Rather than tackling development bottlenecks in isolation, participants stressed the importance of systems thinking, looking at the broader structures that give rise to gaps in infrastructure, development financing and social spending. Linking planning with budgeting, implementation and institutional capacity was presented as essential for making better use of limited resources 'Long-term planning pushes countries to think beyond the immediate, ensuring that development strategies are more adaptive, coordinated and resilient,' said Nassim Oulmane, Chief of the Green and Blue Economy Section at ECA. Country examples reinforced this message. Ethiopia is implementing a ten-year national plan supported by new tax and revenue measures. Uganda is aligning its national planning processes with the SDGs. Sierra Leone is applying long-term approaches at the sector level, and Nigeria is coordinating development plans across both national and state institutions. All four countries are also participating in follow-up to the Seville Financing for Development (FfD4) conference, where domestic resource mobilization featured prominently. To support these efforts, ECA and APRM are promoting practical tools like the Integrated Regional Planning Toolkit (IRPT), which helps governments embed long-term planning into national strategies and financial frameworks. The session also underscored the broader economic stakes. Africa continues to lose significant capital through leakages and inefficiencies, undermining development even in countries with strong growth potential. By planning more strategically and investing in anticipatory systems, countries can position themselves to mobilize internal resources and build more resilient economies. With global financing under strain and aid flows declining, participants agreed that better planning is not just a technical fix but a strategic necessity. As Africa moves through the Decade of Acceleration, how governments plan, and how effectively those plans are linked to implementation, may well determine the pace of progress. Distributed by APO Group on behalf of United Nations Economic Commission for Africa (ECA).
TimesLIVE
10-06-2025
- Business
- TimesLIVE
AU agency says Fitch's downgrade of Afreximbank is ‘flawed'
An African Union (AU) credit review body has questioned Fitch ratings agency's downgrade of Africa Export-Import Bank (Afreximbank) last week, saying it was based on a 'flawed' categorisation of loans and calling for the decision to be reconsidered. Last Wednesday Fitch downgraded Cairo-based Afreximbank's credit rating to BBB-, one notch above junk ratings, from BBB, citing high credit risks and weak risk management policies. Fitch calculated the ratio of Afreximbank's non-performing loans (NPLs) exceeded the 6% "high risk" threshold outlined in the ratings agency's criteria. Afreximbank said in its first quarter operating results the NPLs ratio stood at 2.44% at the end of March. The African Peer Review Mechanism (APRM), a body established by the AU to do the groundwork for the launch of an African credit ratings agency later this year, contested Fitch's calculations and called for talks between Fitch, Afreximbank and other African institutions. 'The APRM notes with concern Fitch Ratings' misclassification of Afreximbank's sovereign exposures to the governments of Ghana, South Sudan and Zambia as NPLs,' APRM said on Friday. 'The classification raises critical legal, institutional and analytical issues which the APRM strongly contests.'
Russia Today
10-06-2025
- Business
- Russia Today
Africa to launch new credit rating agency
Africa is preparing to launch its first homegrown credit rating agency by the end of September, Bloomberg reported on Monday. The African Credit Rating Agency (AfCRA), supported by the African Union's African Peer Review Mechanism (APRM), plans to publish its first sovereign rating by late 2025 or early 2026. According to Misheck Mutize, the lead expert on credit-rating companies at the APRM, a shortlist for the chief executive position has been finalized, with an appointment anticipated in the third quarter. The creation of AfCRA follows longstanding criticism from African governments regarding what they perceive as biased and non-transparent evaluations by the dominant global rating agencies, Fitch Ratings, Moody's Ratings, and S&P Global Ratings. Officials across the continent have accused the firms of systematically underestimating African economies, thereby increasing borrowing costs. The APRM recently questioned Fitch's decision to downgrade Afreximbank, labeling the move as 'flawed.' Countries such as Ghana and Zambia, both of which have defaulted on their debt obligations in recent years, have emerged as outspoken critics of the current global ratings framework. Despite its pan-African mission, AfCRA will not be a state-owned enterprise. Mutize clarified that this decision is intended to safeguard the agency's independence. Ownership will primarily lie with African private-sector stakeholders, although specific participants have yet to be disclosed. Mauritius-based MCB Capital Markets has been appointed as transaction adviser. Initially, AfCRA will concentrate on providing local-currency credit ratings. Mutize, however, dismissed speculation that the agency is being set 'to give favorable ratings to Africa.' The APRM was established in 2003 by the New Partnership for Africa's Development (NEPAD) and currently has 44 member-states. It is a voluntary self-monitoring tool for AU countries to assess governance performance and to ensure adherence to the union's values in political, economic, and corporate governance.
Arabian Post
09-06-2025
- Business
- Arabian Post
Afreximbank downgrade dispute raises questions on loan categorisation
African Union's African Peer Review Mechanism has challenged Fitch Ratings' downgrade of the African Export‑Import Bank, arguing the move rests on a misinterpretation of its sovereign loan portfolio. On 4 June, Fitch lowered Afreximbank's long‑term foreign‑currency issuer rating from BBB to BBB‑—a notch above junk—with a negative outlook. The agency attributed the downgrade to elevated credit risk, citing an estimated non‑performing loan ratio of 7.1 %, primarily due to sovereign exposures to Ghana, South Sudan and Zambia classified as NPLs. The APRM asserts that Fitch's classification is flawed and inconsistent with Afreximbank's own disclosure of an NPL ratio of 2.44 % as of end‑March. The AU‑established body emphasises the bank's status as a multilateral lender created under a 1993 treaty, which binds member governments—including Ghana and Zambia—as signatories, shareholders and founding members. APRM contends such loans are grounded in intergovernmental cooperation rather than standard commercial terms, so treating them as NPLs misrepresents their nature. Fitch defended its methodology, stating that its supranational rating decisions adhere to globally consistent and publicly available criteria, and highlighting that their analysis clearly identified rating drivers and sensitivities. The agency maintains sovereign exposures showing delayed repayments meet its threshold for classification as non‑performing, irrespective of legal structures or treaties. In that sense, the downgrade aligns with accepted analytical standards. ADVERTISEMENT APRM's critique zeroes in on that threshold. It argues that sovereign repayment negotiations are routine diplomatic engagements, not signs of default. It remains concerned that Fitch's decision conflates financial dialogue with credit impairment. The body has formally called on Fitch, Afreximbank and other African institutions to convene technical consultations and reassess the rating, emphasising the importance of contextually intelligent credit assessments. Beyond the immediate dispute, this episode resonates with a broader continental debate over the relevance and fairness of global credit‑rating frameworks applied to African multilaterals. Africa's longstanding concerns that Western rating methodologies fail to grasp local realities and may unfairly inflate borrowing costs have sparked momentum for alternative mechanisms. Among these, an Africa‑led credit‑rating agency is under development, envisaged to begin operations by September 2025, aimed at providing sovereign ratings that reflect regional economic and institutional contexts. Central to the debate is Afreximbank's evolving lending strategy. Under outgoing president Benedict Okey Oramah, the Cairo‑based lender has aggressively expanded its footprint, increasingly financing private sector projects across the continent and taking calculated sovereign exposure. Supporting growth in under‑served markets like Zimbabwe and Nigeria, the bank grew its asset base from around US$7 billion in 2015 to approximately US$40 billion in 2024, with deposits rising to US$37 billion. That growth has attracted scrutiny. Fitch has highlighted what it sees as elevated concentration of corporate and sovereign risk, pointing to an NPL ratio that exceeds its internal threshold. Observers note that up to 92 % of Afreximbank's lending is directed at commercial businesses, and certain sovereign loans carry interest rates as high as 6.875 % over benchmark rates—much higher than traditional development finance institutions. Proponents of the APRM's position, including lead credit‑ratings expert Misheck Mutize, argue that supplementary indicators such as capital adequacy, collateral density and profitability should carry mitigating weight. Mutize points to a strong equity ratio of 19 %, risk‑weighted capital at 21 %, internal capital generation through profits, and loan collateral cover for 84 % of the portfolio. These factors, he suggests, are downplayed in the rating downgrade despite being explicitly acknowledged in Fitch's own analytic framework. He warns that over‑reliance on contested NPL figures can breach the methodology's balance principles. ADVERTISEMENT Not everyone supports APRM's framing. Analysts note that countries like Zambia officially halted repayments to Afreximbank in 2021, and South Sudan failed to honour its obligations, prompting legal recourse in London. Zambia's treasury has openly stated its debt will be restructured. Against this backdrop, Fitch's interpretation that certain sovereign debt has become non‑performing appears defensible under global standards. This dispute underscores a tension: Afreximbank's assertive growth strategy has boosted its developmental reach and institutional clout, yet it must reconcile that dynamism with risk and transparency expectations imposed by global credit agencies. With Oramah set to step down later this month, the new president will face a pivotal choice: maintain aggressive expansion as the bank charts an independent path, or recalibrate operations to conform more closely with multilateral development bank norms—a course change that could preserve borrowing benefits but limit growth prerogatives. Beyond institutional implications, the outcome has broader financial consequences. A downgrade to BBB‑ tightens Afreximbank's borrowing costs, heightens the risk premium for countries swayed by its lending, and complicates its mission to finance intra‑continental trade. That may squeeze African exporters and traders relying on the bank's funding. Policy stakeholders are paying attention. The APRM's call for dialogue and transparency signals a pushback against the perceived hold of Western agencies over African financial destiny. Meanwhile, the African Development Bank is developing a Continental Financial Stability Mechanism that may borrow under a regional rating—another step towards financial sovereignty.
Zawya
09-06-2025
- Business
- Zawya
African Union agency says Fitch's downgrade of Afreximbank is 'flawed'
An African Union credit review body has questioned Fitch ratings agency's downgrade of Africa Export-Import Bank last week, saying it was based on a "flawed" categorisation of loans and calling for the decision to be reconsidered. Last Wednesday, Fitch downgraded Cairo-based Afreximbank's credit rating to BBB-, one notch above junk ratings, from BBB, citing high credit risks and weak risk management policies. Fitch calculated that the ratio of Afrexim's non-performing loans (NPLs) exceeded the 6% 'high risk' threshold outlined in the ratings agency's criteria. Afreximbank said in its first quarter operating results that the NPLs ratio stood at 2.44% at the end of March. The African Peer Review Mechanism (APRM), a body established by the African Union to do the groundwork for the launch of an African credit ratings agency later this year, contested Fitch's calculations and called for talks between Fitch, Afreximbank and other African institutions. "The APRM notes with concern Fitch Ratings' misclassification of Afreximbank's sovereign exposures to the Governments of Ghana, South Sudan and Zambia as NPLs," APRM said in a statement published late on Friday. "This classification raises critical legal, institutional and analytical issues which the APRM strongly contests." Fitch defended its rating decision, saying it operates on the basis of independent and timely analysis. "All Fitch's supranational rating decisions are taken solely in accordance with one globally consistent and publicly available rating criteria, with rating drivers and sensitivities clearly identified in our ongoing public rating commentary," the ratings agency told Reuters. The row over the rating, which determines the cost of credit for a financial institution, comes as Afreximbank seeks to protect its loans from restructuring in Ghana, Zambia and Malawi, saying that as a multilateral lender it has preferred creditor status. "The assumption that Ghana, South Sudan and Zambia would default on their loans to Afreximbank is inconsistent with the 1993 Treaty establishing the Bank to which Ghana and Zambia are both founding members, shareholders and signatories," APRM said. The founding treaty of the lender, whose mandate is to promote intra-Africa and extra-Africa trade, is legally binding on all members, APRM said, placing legal obligations on the bank's financial operations. Afreximbank has not commented on the downgrade by Fitch, but it has previously said it is not in debt restructuring talks with any of its member states. Afreximbank's loans to its member states are governed by "a framework of intergovernmental cooperation and mutual commitment, rather than typical commercial risk principles", shielding its loans from sliding into non-performance realm, APRM said. "Fitch's unilateral treatment of these sovereign exposures -as comparable to market-based commercial loans - despite their backing by treaty obligations and shareholder equity stakes, is flawed," APRM said. (Reporting by Duncan Miriri; Editing by Karin Strohecker and Susan Fenton)
