By Onu Okorie

African Development Bank is preparing a new initiative to help African governments strengthen the data and transparency used in sovereign credit assessments, in a move aimed at addressing one of the factors that can contribute to the continent’s high borrowing costs.
AfDB President Sidi Ould Tah said on Thursday that the initiative, to be delivered through the bank’s African Legal Support Facility, would help countries prepare more effectively for credit-rating assessments by improving the quality and availability of economic and financial information.
“What is missed in Africa is the data and the infrastructure,” Tah said at the S&P Emerging Markets Conference in London. “The opacity in some markets creates this notion of high risk, which leads to high cost of borrowing.”
The initiative comes as African governments face renewed pressure to reduce the cost of financing at a time when many countries are seeking to fund infrastructure, development and climate-related investment while managing high debt-servicing burdens.
Only three of Africa’s 54 countries currently have investment-grade sovereign ratings, according to Tah, highlighting the limited access to the highest-quality credit markets across the continent.
African governments and officials have for years challenged what they regard as excessively high financing costs, arguing that perceptions of risk can push up yields on African debt even when economic fundamentals do not fully justify the premium.
The major international rating agencies have rejected suggestions that they apply different methodologies to African countries, saying their sovereign assessments are based on globally applicable frameworks.
The AfDB initiative will therefore focus on improving the information available to ratings agencies rather than seeking to replace existing assessments, according to Tah.
A wider push for African ratings
The move comes as African institutions pursue parallel efforts to develop alternatives and strengthen the continent’s financial architecture.
The African Peer Review Mechanism, an African Union-backed initiative, plans to launch a continent-wide credit-rating agency this month. Its proponents argue that a ratings institution with greater regional expertise could provide an additional assessment of African sovereign and corporate risk.
The debate reflects a broader concern that international investors often have limited information about African economies, particularly where financial data is incomplete, inconsistent or difficult to access.
Better data could help investors distinguish between countries and assets rather than applying broad risk assumptions across markets, African policymakers argue.
For the AfDB, however, the ratings initiative forms part of a larger effort to deepen Africa’s domestic financial markets and reduce reliance on expensive external borrowing.
Tah said the bank has been consulting pension funds, commercial banks and other financial-sector stakeholders to identify obstacles to stronger capital markets and greater domestic resource mobilisation.
The objective is to increase the pool of financing available within Africa, potentially allowing governments and companies to rely more heavily on local savings rather than external debt.
That effort is particularly important as African governments confront a difficult financing environment. Higher global interest rates in recent years have increased the cost of servicing foreign-currency debt, while tighter access to international capital markets has made it harder for some emerging-market borrowers to refinance.
Developing deeper domestic bond markets and institutional-investor bases could provide an additional source of long-term funding and reduce exposure to swings in international capital flows.
Beyond the ratings debate
The AfDB’s approach points to a broader shift in the continent’s financing strategy: improving access to capital may depend not only on attracting more international investors, but also on strengthening the infrastructure needed for investors to assess risk.
Credit ratings are only one part of that equation. Reliable economic statistics, transparent public finances, predictable legal systems, functioning capital markets and a broad domestic investor base can all influence how investors price African assets.
Tah’s comments suggest the AfDB sees better information as an important starting point.
The challenge will be translating improvements in data and transparency into lower risk perceptions and, ultimately, cheaper financing for African governments and businesses.
With African countries seeking billions of dollars in additional financing for development, the stakes are significant: reducing the information gap could become as important as finding new sources of capital.