The African Union (AU) has appointed South African ratings executive Sifiso Falala as interim chief executive of the Africa Credit Rating Agency (AfCRA), giving the newly launched institution its first operational leader as it prepares to assess African sovereign and corporate borrowers.

Falala is chief executive of Sovereign Africa Ratings, based in Centurion, South Africa. The rating agency awarded South Africa an investment-grade BBB long-term rating with a stable outlook in September 2022, above the sub-investment-grade assessments then assigned by the three major international agencies.

His appointment follows AfCRA’s formal launch on October 7 in Port Louis, Mauritius, where the agency will be headquartered. The launch came eight years after the idea was first championed at the AU in Addis Ababa, CNBC Africa reported.

See IntelliNews: African Union-backed credit rating agency to launch in Mauritius amid dispute over perceived bias

AfCRA was established under an AU mandate as a privately financed rating agency intended to operate independently, with the African Peer Review Mechanism (APRM) overseeing its creation. Its governance model excludes government shareholding, but the identities and stakes of its private investors have not been publicly disclosed, Reuters reported.

The agency will rate sovereigns, sub-sovereign borrowers and companies, using data and expertise from the continent. The AU says it “complements existing global credit rating agencies”, which include S&P Global Ratings, Moody’s and Fitch Ratings.

AfCRA is expected to issue its first ratings within three months. The agency must still establish its methodology and build confidence among investors and borrowers.

It enters a market already served by African-based competitors, including Nigeria’s Agusto & Co, South Africa’s GCR Ratings and Côte d’Ivoire’s Bloomfield Investment Corporation.

The AU says 23 of its 55 member states lack ratings from the three major international agencies. African economies are rated B to B-minus on average, compared with BB for other emerging regions, according to the continental body.

African policymakers argue that international ratings do not fully reflect the continent’s economic conditions, contributing to higher borrowing costs. The major global agencies reject allegations of systematic unfairness, saying they apply consistent methodologies worldwide. A 2024 Reuters investigation found no evidence of systemic bias in their African sovereign ratings.

See IntelliNews: Credit where credit is due? Africa builds new financial channels to challenge the ‘Africa premium’

The African Development Bank (AfDB) is to start an initiative to help African governments prepare for credit ratings, its president, Sidi Ould Tah, has said.

See IntelliNews: AfDB to help African states prepare for credit ratings as continental agency launch nears

Africa’s annual external debt-service payments rose to $163bn in 2024 from $61bn in 2010, according to AU figures.