African credit rating agencies are starting to be taken seriously

Audio 02:16

Moody's, Standard and Poor's or Fitch are large Anglo-Saxon financial rating agencies that determine the ratings of countries or companies, and therefore the financial conditions under which they borrow.

The lower the score, the more expensive the credit.

But African agencies are increasingly taken into consideration.

© Shutterstock / Emzii F. Clef

By: Olivier Rogez Follow

6 mins

In recent years, 100% African financial rating agencies such as Bloomfield Investment, Wara or GCR, have been trying to make a different voice heard, with rating systems deemed more realistic.

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Stanislas Zeze heads Bloomfield Investment Corporation, an Ivorian financial rating agency created in 2007. For him, African leaders must understand that it is better to be rated by African agencies than by Anglo-Saxons.

“ 

We unfortunately see some countries that take pleasure in the ratings given by Standard and Poor's and Moody's, because they are Standard and Poor's and Moody's.

It's a shame, you have to get out of this complex, and tell yourself that when S&P or Moody's gives you a B +, it means "high risk".

There is nothing to be happy about,

 ”says Stanislas Zeze.

For him, the mistake of traditional rating agencies is not to take into account the specificity of African economies.

Namely, a structural weakness to generate international currency inflows.

This is an important point, because it is on the capacity to repay a debt in dollars or in euros that the big agencies judge the States and the companies.

An approach based on local currencies

Stanislas Zeze adopts an approach based on local currencies.

“

Today it is important for African states and entities that operate on the continent to have their financial rating in local currency first.

And only then to establish a note in foreign currency.

This way, the investor, whether international, regional or local, will have a panoramic view of the performance of the entity or the country.

" 

And in the end, the grade awarded will not be the same.

“

Take the Ivory Coast for example.

The rating from Fitch or Standard and Poor's is 2B-, which is equivalent to "fairly high risk".

Bloomfield has a rating of A-, or "low risk".

Because you have noticed that Côte d'Ivoire has a fairly resilient and fairly efficient economy, even if it has weaknesses,

 ”he demonstrates.

This difference in rating will condition the credit rate at which a State or a company will borrow.

"Appetite for issues in CFA francs or in naïras"

Anouar Hassoune heads Wara, a West African rating agency backed by the South African giant GCR.

For him, the local currency rating is all the more essential as more and more foreign investors are interested in African markets. 

“

We see foreign investors arriving on the market in local currencies, and not for international currencies.

That is to say that there are bond investors in the North and also in Asia who have an appetite for issues in CFA francs, in naïras.

Consequently, it is important that these investors have access to independent and good quality information,

 ”emphasizes Anouar Hassoune.

The African vision in terms of financial rating is intended to be more precise and therefore fairer than the Anglo-Saxon vision.

It is starting to establish itself on the local markets, it now has to convince the rest of the world.

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