Pretoria’s finance minister says Western assessments fail to reflect the continent’s economic fundamentals
Major global rating agencies have demonstrated a “bias” against African countries by giving them lower credit scores compared to peers with similar fiscal metrics, South Africa’s finance minister has told Bloomberg.
Enoch Godongwana’s comments come a day after he delivered a budget with an improved fiscal outlook; however, he told the outlet he’s not holding his breath for a rating upgrade.
“My sense is that it’s not a foregone conclusion… It’s going to be a bonus if they give us a better rating,” he said in an interview ahead of the latest review from S&P Global Ratings.
S&P currently rates South Africa’s long-term foreign debt at BB minus, three notches below investment grade, and has kept a positive outlook since November last year, signaling the possibility of an upgrade. Rival ratings agencies Moody’s and Fitch also classify the country’s debt as sub-investment grade.
Godongwana said the agencies “are behind the curve,” insisting that South Africa’s improved debt trajectory over the past five years is not fully reflected in their assessments. He noted that “countries with the same fiscal metrics get a better rating than Africans,” despite relatively low default rates on the continent.
“It may not be conscious,” he said, but “there is already a bias against the African continent by multinational institutions, by the investing community, by rating agencies.”
An expert panel report to next week’s G20 summit in Johannesburg will provide “data to prove that,” the minister added.
As a result of lower ratings, African governments pay far higher borrowing costs than countries in other regions, according to data cited by Bloomberg. The average yield on dollar-denominated sovereign bonds from sub-Saharan Africa stands at 9.1%, above the 6.5% in Latin America and almost double the 4.7% in emerging Asia. Of the ten sovereigns with the world’s highest spreads, six are African states, including Senegal, Gabon, Mozambique, Cameroon, Angola and the Republic of Congo.
Ghana and Zambia have also previously criticized global rating firms, saying downgrades scare off investors and worsen their access to credit. In 2023, Ghana’s then-leader Nana Akufo-Addo said the agencies’ “reckless behavior” had worsened the country’s financial difficulties.
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