ABUJA, Nigeria (VOICE OF NAIJA)-Bola Tinubu has urged the international community to pursue a more equitable global financial system, arguing that African nations are burdened with excessively high borrowing costs due to what he described as long-standing misjudgements by dominant international credit rating agencies.
In an opinion article, Tinubu said Africa was “paying too much to borrow”, stressing that calls to eliminate the so-called “Africa premium” the disparity between how the continent is rated and the true state of its economies can no longer be overlooked.
He drew attention to the disproportionate power wielded by the world’s three leading rating agencies, noting that their assessments heavily influence investor behaviour and Africa’s access to global capital, despite often failing to capture domestic economic realities.
“Fitch, Moody’s and S&P Global Ratings… wield outsized influence over Africa’s access to international capital. Their judgements shape investor behaviour, yet they consistently misjudge African risk,” Tinubu wrote.
He said the impact of these distortions is substantial, citing a 2023 report by the United Nations Development Programme which found that “idiosyncrasies” in credit ratings cost Africa about $75bn each year in excess interest payments and lost lending opportunities.
Tinubu observed that only three African countries currently enjoy investment-grade ratings, even as the International Monetary Fund projects the continent as the world’s fastest-growing region this year.
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He argued that proposals to establish an African credit rating agency therefore represent a “necessary corrective”, especially given what he described as the major shortcoming of existing global agencies: weak on-the-ground presence.
He explained that current rating models blend quantitative data with subjective assessments of political risk, institutional capacity and policy durability, while “how those judgements are reached and how much they count is left to opaque ‘analyst discretion’.”
“Conclusions drawn from afar fail to capture local realities,” he added.
Tinubu further contended that dependence on these ratings often magnifies global market cycles rather than reflecting country-specific fundamentals.
He noted that commodity-dependent African economies are frequently downgraded during periods of falling global prices or tighter financial conditions, even when reserves are strong and fiscal buffers remain intact.
“Downgrades then become self-fulfilling, raising borrowing costs and straining public finances,” he wrote.
While endorsing the creation of a continental ratings agency, Tinubu emphasised that it must earn global credibility by providing timely, comprehensive and trusted data.
He pointed to Nigeria’s recent credit upgrades as partly driven by improved data transparency, including the recognition of previously off-balance-sheet central bank lending in public debt figures, GDP rebasing and the publication of more budget documents.
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He also referenced policy reforms such as fuel subsidy removal and exchange-rate liberalisation, noting that these steps had bolstered non-oil growth and supported economic diversification.
“The rest reflects hard policy choices, such as the removal of a wasteful fuel subsidy and the liberalisation of the exchange rate,” he wrote.
Despite these measures, Tinubu said Nigeria’s ratings still trail the pace of reforms and investor sentiment, pointing out that the country’s November dollar-denominated bonds were oversubscribed 5.5 times.
“Slow upward adjustments are commonplace across Africa, especially when set against the speed of downgrades,” he said, adding that smaller economies with limited market visibility suffer the most.
He argued that a continent-wide ratings agency could better capture reform momentum in real time, helping African countries access markets more quickly after implementing difficult policy changes.
“Africa’s success is not a regional concern but a global opportunity,” Tinubu wrote, noting that by mid-century the continent would represent a quarter of the world’s working-age population.
He concluded that while global investors would continue to rely on established agencies for validation, an African ratings agency could act as an early indicator of progress and help ensure African countries compete on what he described as a level playing field.