By Dr. Macharia Kihuro
In a current public assertion, the African Export-Import Financial institution (Afreximbank) introduced it might terminate its credit standing relationship with Fitch Rankings. The rationale for this determination was significantly putting. 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 “sturdy, 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 companies apply a single, inflexible methodology to all banks, or ought to their method be tailored to the particular nature of the establishment? Extra exactly, ought to a business financial institution be assessed utilizing the very same framework as a multilateral improvement financial institution (MDB)? Afreximbank contends that Fitch Rankings did not account for this important 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 business 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 element is the “Assist Score” framework, the place exterior help is evaluated. Right here, theoretically, the excellence is made: for MDBs like Afreximbank, help is assessed because the collective, contractual dedication of its member states underneath its Institution Settlement that’s thought of extraordinarily robust and dependable. For top-quality MDBs, Fitch typically makes use of a “credit score substitution” method, 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 considered 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 important examination of tolerating tensions in international finance: Are worldwide ranking companies’ methodologies inherently biased in opposition to African establishments? Or did Afreximbank misunderstand the framework and overreact? In the end, 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 ranking requirements?
Is Afreximbank an remoted case? Emphatically, no. A longstanding and widespread sentiment throughout Africa holds that the methodologies of the “Huge Three” ranking 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 basic “dialogue of the deaf.”
Ghana has commonly 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 current downgrade was anchored in Ghana’s 2023 debt restructuring, making use of a precept that hyperlinks an MDB’s danger 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 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 important classes. A substantive downside 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 danger 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 important. 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 robust governance, demanding readability on how qualitative components are scored.
Dr. Macharia Kihuro (PhD) is a improvement finance knowledgeable with in depth expertise throughout Sub-Saharan Africa.
