A continental rating agency, deeper domestic markets and new payment rails are widening Africa's financing options — but the test is whether they can reduce a measurable cost-of-capital penalty

When the Africa Credit Rating Agency (AfCRA) launches in Port Louis on October 7, it will be the most direct attempt yet by African institutions to influence how the continent's risk is assessed and priced.

The homegrown rating agency’s launch is part of a broader push to widen Africa's financing options rather than replace external markets. Senegal is tapping the regional bond market, the Pan-African Payment and Settlement System (PAPSS) is building local-currency payment rails and Nigeria's Dangote refinery is raising fresh equity at home, while Airtel Money has chosen London for a secondary offering that will provide liquidity to existing shareholders rather than new capital to the company.

The question is whether more options lower costs, widen access and make financing more resilient. African-owned ratings, payment systems and domestic markets can reduce dependence on a narrow set of external channels, but their value will ultimately show up in borrowing costs, market depth and transaction friction.

The cost gap is real, although smaller and less uniform than some headline estimates suggest. IMF Working Paper 2025/139, Navigating the Evolving Landscape of External Financing in Sub-Saharan Africa, published in July 2025, estimated that sub-Saharan African sovereigns paid a 46-basis-point premium over comparable borrowers when issuing eurobonds in normal conditions. The gap widened to more than 120 basis points during global shocks.

The IMF working paper found no statistically significant African premium in secondary-market sovereign spreads once economic and sociopolitical risks and governance were taken into account. It also found limited evidence of systematic credit-rating agency bias against sub-Saharan African countries.

The case for new financial infrastructure is therefore less about escaping global markets than about creating alternatives when those markets become costly, volatile or inaccessible.

Ratings: can AfCRA change the price?

AfCRA, developed through the African Union's African Peer Review Mechanism (APRM), will, once fully operational, offer African-owned credit opinions on sovereign and corporate issuers. It will be private-sector-driven, a structure the APRM says will protect its independence, and is designed to complement rather than replace Moody’s, S&P and Fitch.

See: Africa Credit Rating Agency created to overcome perceived bias against continent launches October 7.

The potential prize is large. A 2023 UN Development Programme study estimated that African countries could save as much as $74.5bn in excess interest and forgone financing if ratings relied less on subjective assessments.

Nigerian President Bola Tinubu, a long-standing advocate of an African agency, has set the bar. “AfCRA must now earn the confidence of global capital. That confidence will rest on its independence and the rigour of its work,” he said.

A study by the Konrad-Adenauer-Stiftung and the Leibniz Institute for Economic Research reached a similar conclusion: AfCRA could improve financing conditions only if it establishes methodological rigour, transparency and independence.

International Finance Corporation managing director Makhtar Diop offered a more direct critique of market pricing on September 22, two weeks before the launch date, arguing that investors overprice African risk and that shocks in one country can trigger a continent-wide “contagion effect” in perceptions. The IFC is opening more of its emerging-market credit-performance data to investors and rating agencies to improve risk assessment.

S&P Global, Moody’s and Fitch say they apply common sovereign methodologies across countries and continents. Critics argue that inputs such as institutional strength and GDP per capita can nevertheless structurally disadvantage poorer states. That matters disproportionately for Africa: 18 of the 20 countries with the lowest projected GDP per capita in 2026 are in sub-Saharan Africa.

Only three of Africa's 54 sovereigns hold an investment-grade rating from at least one of the big three agencies.

Botswana is rated Baa1 by Moody’s and BBB by S&P, although both agencies downgraded it in the second half of 2025 as diamond revenues slumped, and both have negative outlooks. Mauritius holds Moody’s lowest investment-grade rating, Baa3, while S&P restored Morocco to investment grade at BBB- in September 2025, reversing a 2021 downgrade. Regional heavyweights including South Africa, Egypt, Nigeria and Kenya remain below investment grade.

Regulatory recognition will be another hurdle once AfCRA begins operating. It was not among the rating agencies registered or certified by the European Securities and Markets Authority on the register last updated on August 3, although that was before the agency had launched. Peter Fabricius of the Institute for Security Studies points to Europe's Scope Ratings, created partly as an alternative to the US-dominated agencies but still holding less than 1% of the global market.

Producing different ratings will not be enough; investors and regulators will have to act on them.

Afreximbank: testing the power to push back

The Cairo-based African Export-Import Bank (Afreximbank) has become the clearest case of an African institution contesting its ratings, and of the limits of doing so.

Fitch downgraded the multilateral lender to BBB- with a negative outlook in June 2025, citing exposure to sovereign debt restructurings. Moody's followed with a downgrade to Baa2 in July 2025.

Afreximbank terminated its relationship with Fitch on January 23, 2026, arguing that the agency no longer reflected a proper understanding of its treaty status and mandate. Five days later, Fitch lowered it to BB+, below investment grade, and then withdrew its ratings, citing the treatment of Afreximbank's $750mn loan in Ghana's debt restructuring as evidence that it had not benefited from preferred-creditor status.

S&P took a different view in June, assigning Afreximbank a BBB+ investment-grade rating with a stable outlook. It did not incorporate preferred-creditor status into its assessment and noted that almost 80% of the bank's lending was to private-sector entities.

See: Afreximbank chief says fair credit ratings are key to Africa’s industrialisation.

The bond market, meanwhile, provided a test of investor demand. In July, Afreximbank raised $1.5bn in its largest-ever bond issue and first public dollar deal since 2021, with orders peaking at about $3.8bn. The $750mn 5.5-year tranche priced to yield 6.25% and the $750mn 10-year tranche 7.125%, even after pricing was tightened by 37.5 basis points.

Strong demand kept the market open; it did not make the money cheap.

Payments: African rails and Chinese renminbi optionality

Cross-border payments add a different kind of friction: correspondent banking fees, currency conversion and reliance on external settlement systems.

PAPSS, developed by Afreximbank under the African Continental Free Trade Area (AfCFTA) framework, allows cross-border transactions to be initiated and received in African currencies rather than routing every payment through external correspondent banks and hard currencies.

PAPSS said the addition of the Bank of Central African States (BEAC) in July expanded its network to 28 African countries, more than 190 commercial banks and fintechs and 16 payment switches. But headline reach exceeds operational coverage. PAPSS and BEAC are rolling out integration across the six-country Central African Economic and Monetary Community (CEMAC), while a pilot with the Central Bank of West African States (BCEAO) is scheduled for later in 2026.

PAPSS does not eliminate hard currency from settlement, but it can reduce the number of transactions routed through dollars or euros.

China offers a second route. In June, South Africa's Standard Bank Group (JSE: SBK; NSX: SNB) and the Industrial and Commercial Bank of China (SSE: 601398; HKEX: 1398) were authorised to operate jointly as the Renminbi Clearing Bank of Africa, with capacity to clear renminbi in 19 African countries.

Standard Bank processed about CNY3.4bn, roughly $470mn, through China's Cross-Border Interbank Payment System in its first four months on the system, and more than CNY8bn by July. Pan-African lender Ecobank Transnational Incorporated (NGX/GSE: ETI; BRVM: ETIT) said in April that it was in talks with Bank of China (SSE: 601988; HKEX: 3988) to offer direct yuan settlement.

PAPSS builds African rails around local currencies; the renminbi arrangement adds an alternative external currency. Both can cut transaction costs, but neither ends reliance on outside currencies or institutions.

Regional markets: protecting the local-currency funding base

Deeper domestic and regional markets offer a further defence against expensive hard-currency borrowing.

African policymakers are also pursuing a regional backstop for periods when markets close. African Union leaders endorsed the proposed African Financial Stability Mechanism in February 2025. The African Development Bank (AfDB) estimates it could save African sovereigns about $20bn in debt-service costs by 2035 if implemented, although it still requires a formal agreement and ratification by participating states.

The Abidjan-based Bourse Régionale des Valeurs Mobilières (BRVM), which serves the eight members of the West African Economic and Monetary Union, has rallied strongly in 2026 while courting international investors.

See: INTERVIEW: CEO of West Africa's regional stock exchange says it's time for investors to come to Africa.

For the week ended September 11, the BRVM Composite closed at a then-record 555.48 points, up about 60.7% since the start of the year, while equity market capitalisation stood at XOF21.42 trillion.

Senegal’s recent borrowing shows the value of that depth. Its first regional public bond offering of 2026 raised XOF304.15bn from investors between February and March, well above a XOF200bn target. Four tranches carrying coupons ranging from 6.40% to 6.95% subsequently began trading on the BRVM.

Dakar returned to the market in September, launching a second 2026 public offering targeting XOF200bn, with subscriptions running from September 17 to October 8.

Its external position is far more strained. On September 1, IMF staff reached agreement with Dakar on a proposed $2.2bn, 36-month Extended Credit Facility. The deal still needs IMF management and Executive Board approval, as well as financing assurances from Senegal's partners. Senegal must also take corrective action to support its request for a waiver in a misreporting case before the Board votes.

The government has separately announced plans to seek debt treatment under an enhanced form of the G20 Common Framework. S&P subsequently cut Senegal’s foreign-currency rating to CC from CCC+ and its local-currency rating to CCC from CCC+, saying a distressed exchange or default on foreign-currency commercial debt was extremely likely. Dakar plans to exclude CFA franc-denominated debt, but S&P said the size of that debt stock, around a third of the total, could lead some external creditors to challenge the exclusion.

Prime Minister Ahmadou Al Aminou Lo has said the government intends to "reprofile" rather than "restructure" its debt. The Institute of International Finance has described the process as a test of whether the revamped Common Framework can deliver timely treatment.

See: Emerging markets drive global debt past $365 trillion, IIF says.

Dakar is trying to preserve regional funding while seeking relief on external obligations, but S&P's local-currency downgrade shows that domestic markets cannot be fully insulated from sovereign stress.

A far larger pool of domestic capital remains underused. African pension funds and insurers hold about $775bn in assets, roughly $455bn in pension funds and $320bn with insurers, according to the OECD's 2025 Africa Capital Markets Report, citing Africa Finance Corporation (AFC) estimates.

Much of it sits in government securities rather than long-term productive investment. Redirecting even part of it towards corporate and infrastructure finance could deepen local markets and reduce dependence on foreign-currency borrowing.

Currency risk adds a further cost. The AfDB board approved a $25mn equity investment in the Currency Exchange Fund (TCX) in September 2025 and signed the investment agreement in February 2026. Since 2007, TCX has hedged $4.7bn of transactions across 31 African countries.

London and Lagos: two routes to equity

Equity markets raise a related question: where African companies can raise or realise capital, and at what valuation.

Airtel Money, the mobile-money arm of London-listed Airtel Africa (LSE: AAF), announced on September 23 that it intends to list on the London Stock Exchange through a sale of existing shares, so the company itself will raise no new capital. Airtel Africa owns 77.85% and plans to remain a long-term shareholder.

The offer is expected to have a free float of at least 10%. Press reports citing people familiar with the deal say it could raise about $800mn for selling shareholders and value Airtel Money at $8bn-$9bn.

See: Airtel Africa's mobile money arm launches London IPO process with reported $8bn-$9bn valuation.

At the $8.5bn midpoint, Reuters Breakingviews calculated that Airtel Money would be valued at just over 10 times projected enterprise value to EBITDA, broadly comparable with European fintech groups Adyen (AMS: ADYEN) and Wise (Nasdaq: WSE; LSE: WISE). That is below earlier ambitions: Bloomberg reported on September 17 that the raise was being cut from a previous target of $1.5bn-$2bn after investor feedback, with the valuation reduced from about $10bn.

The International Finance Corporation has agreed to buy up to GBP67.2mn, about $90mn, of shares as a cornerstone investor. Airtel Money had about 53mn monthly active users at the end of June and processed $213bn of transactions in the preceding 12 months.

Shareholders considered venues in the Middle East, Europe and North America before choosing London. “There's a deep understanding of emerging markets in the London market and Africa specifically,” chief executive Ian Ferrao said.

Dangote Petroleum Refinery is taking a different route. It opened a NGN2.15 trillion ($1.6bn) primary offer on the Nigerian Exchange (NGX) on September 14, offering 4.1bn new shares at NGN525 each. If fully subscribed, the base offer would be Africa's largest IPO. The offer closes on October 13, and proceeds could rise to about $2.1bn if it is oversubscribed and the greenshoe is exercised.

See: Nigeria's Dangote Refinery IPO puts Africa's refining shift in focus.

The public offer follows a $2.5bn private placement in July, led by the AFC, that brought in institutional investors, sovereign-related investment vehicles and development finance institutions. The IPO is therefore less about whether Dangote can attract international capital than whether Nigeria's public market can mobilise a broader investor base.

NGX is using more than 100 distribution channels, including stockbrokers, banks, fintechs and mobile operators, and has made WhatsApp an official entry point to its electronic public-offer platform.

Reuters reported that several digital investment platforms suffered outages when subscriptions opened, with Bamboo saying traffic jumped to 10 times normal levels within 30 minutes. Dangote and its underwriters have not published official subscription figures, so the disruption signals strong retail interest rather than proving overall demand.

The contrast is narrower than London versus Lagos. Airtel Money is seeking a global valuation and liquidity for existing shareholders, while Dangote is gauging the depth of Nigeria's public market after international institutions have already invested privately.

What comes next

The coming months will show whether more institutions and channels change the economics of African finance.

AfCRA's first ratings will indicate whether an African-owned credit opinion can shift how investors price risk, rather than simply add another voice. Further PAPSS integration will show whether nominal continental reach reduces transaction friction. Senegal's debt treatment will reveal whether regional local-currency funding can hold up while the sovereign itself is under strain.

In equity, Airtel Money will establish what London will pay for an African fintech, while Dangote will gauge how much primary capital Nigeria's public market can mobilise after substantial institutional money has already been raised privately.

The IMF research already provides the benchmark: sub-Saharan Africa's primary-market financing penalty is measurable and widens sharply during global shocks.

If the new architecture works, the evidence will show up in narrower issuance penalties, deeper local-currency markets, lower transaction costs and more reliable access to capital.