Category: MIL-OSI

Source: The Conversation – Africa – By Misheck Mutize, Post Doctoral Researcher, Graduate School of Business (GSB), University of Cape Town

The rating agency S&P Global’s Africa Credit Rating Trends 2025 reviews the past year’s rating activities and analyses the continent’s prospects for 2026. It is an important document because it interprets underlying drivers of creditworthiness. It shapes how global investors and policymakers understand risk, opportunity and reform dynamics across the continent.

But the document had some serious flaws in it. As someone who has been researching Africa’s capital markets and the institutions that govern them for decades, I believe they are worth commenting on because mistakes like this can influence investor perceptions. In turn, this can reinforce existing biases and affect how African economies are priced in global financial markets.

Firstly, there were several basic errors. Burundi was mislabelled as Uganda. Sudan and South Sudan were merged into a single country despite being separated since 2011.

The report also displayed a non-existent lake in the Great Lakes region and the Republic of the Congo was casually referred to by its unofficial name, Congo Brazzaville. The agency also presented the continent as having 54 countries, excluding the Sahrawi Republic, which is recognised by the African Union.

At first glance, these errors may seem like minor technical mistakes or editorial lapses in a document focused on financial analysis. But that reading misses the deeper issue. These are not just errors on a map. Errors like this raise questions about the accuracy, depth and rigour of the research and analytical processes behind the credit rating reports that move billions of dollars across the globe.

Systematic risk overestimation is what has led to African countries being penalised with higher interest rates and limited financing options. In effect, seemingly small errors have translated into real economic costs for African economies.

Moody’s made such errors in the past. It issued speculative downgrades for Kenya and Nigeria that it reversed within six and 12 months, respectively. One speculative commentary by Moody’s cost Kenya over US$150 million in a derailed bond buyback programme.

The gaps

At the core of these research shortcomings is a simple but consequential reality – limited presence on the ground.

S&P Global has an office in South Africa from which the team is expected to cover the whole continent. In addition, most of its rating analysts are based in Europe and Asia. These analysts visit the countries they rate for a maximum of two weeks in a year. These short visits and inadequate consultations have resulted in risk assessments based on conservative assumptions, desktop research and publicly available information.

S&P Global has been rating Uganda since December 2008. Yet its researchers still confuse the country’s location on the map.

This matters because global investors who engage Africa from a distance often operate with a cautious instinct. They still, erroneously, perceive Africa as a single, homogeneous risk bloc rather than 55 distinctive sovereigns with different risk dynamics.

Such geographical inaccuracies inadvertently validate this flawed narrative and risk perception, feeding into the misperceptions that distort capital allocation and inflate borrowing costs.

Another flaw the mistakes in the report illustrate is weak internal controls.

In global institutions like S&P Global, it is assumed that every publication undergoes multiple layers of quality assurance and editorial scrutiny. If such fundamental inaccuracies can pass through these filters, what about an analyst’s own assumptions that are embedded in sovereign risk models?

Is it possible that such errors escape scrutiny?

What is also worrying is how S&P Global responded to this issue when it was raised. The errors were flagged repeatedly on S&P Global’s social media platforms after the report was published, yet they remained uncorrected for nearly two weeks.

That delay was telling. It is fair to argue that these inaccuracies did not trigger the required urgency or institutional reflex because they concerned Africa. The corrections would most likely have been immediate, accompanied by formal apologies and internal reviews, if they had involved more powerful or closely watched regions. For example, if such a report had a map combining North and South Korea as one country or mislabelled Germany as France.

The reputational stakes would have been too high for the rating agency to ignore.

Way forward

Africa should not remain on the sidelines while its narrative is being driven by institutions that keep demonstrating a superficial understanding of its fundamentals.

One clear solution, in my view, is the establishment of an African credit rating agency to rebalance the narrative.

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Read more: Africa’s new credit rating agency could change the rules of the game. Here’s how

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But more needs to be done. Here are three solutions.

First, African governments must move from being passive recipients of ratings to active engagement with analysts. Where justified, they must contest assumptions, methodologies and errors. Engagement should not begin after a downgrade. It must be continuous, technical and evidence-based with credible and timely data about their economies.

Second, global institutions such as S&P Global must recalibrate their approach in dealing with Africa. Credibility is derived from consistent accuracy and timely responsiveness. They must invest in permanent senior research and analytical presence on the continent, not episodic visits. It means expanding consultation beyond a narrow set of stakeholders to include local economists, market practitioners and independent researchers. More important, strengthening internal quality controls so that basic errors do not undermine the integrity of complex analytical outputs.

Perception continues to move faster than data, and negative narratives travel further than positive fundamentals. That is why African countries must insist on analytical rigour, demand accountability and build their own capacity to interpret risk.

– Credit and credibility: rating agency errors come with a cost
– https://theconversation.com/credit-and-credibility-rating-agency-errors-come-with-a-cost-279672

Source: The Conversation – Africa – By Daniel Cash, Senior Fellow, United Nations University; Aston University

Some developing country governments spend years making the reforms that international financial institutions want – only to find that their efforts are not rewarded.

They may make budgets more transparent, publish their debt obligations, set up independent bodies to monitor government spending, and complete an International Monetary Fund programme, but still receive the same ratings from credit agencies. Borrowing costs remain high.

The gap between what countries have built and how that progress is reflected in credit ratings and market pricing is persistent and has consequences. It translates into higher borrowing costs, tighter fiscal space, and fewer resources for public investment.

The standard explanation points to bias in method – that credit rating agencies undervalue developing country institutions or rely on indicators that favour the global north.

There is some truth in this observation, and reformers have tried solutions like more agencies, methodology reviews and transparency codes. But these don’t tackle a deeper structural problem.

Based on my work as a researcher on the working of rating agencies, it’s clear that in practice, assessments of developing countries are often made on the basis of incomplete or fragmented information. Data sits in different institutions across the country, is not always produced to a common standard, and is frequently assembled under time pressure ahead of rating reviews. What reaches external assessors is therefore, at best, a partial view of the country’s institutional and fiscal position.

The issue was a major point of discussion at the United Nations in late March 2026 when delegates convened for the inaugural special meeting on credit ratings.

A recurring theme across the discussions was the need to look upstream – at what needs to exist before the rating process actually begins. Then assessments might more accurately reflect the infrastructure that developing countries have built.

That is a meaningful shift. It moves away from demanding that credit rating agencies behave differently, and towards asking what the system as a whole needs to provide. Upstream is where the problem originates and where the most concrete action is possible.

The debate suggests a shift in how key actors, including the United Nations, multilateral development banks and sovereign borrowers themselves, are approaching the problem. This could begin to change how institutional progress is translated into credit assessments and, over time, into borrowing costs.

Constructing a country’s credit story

A sovereign credit rating is not solely formed inside a credit rating agency. It takes shape in the months and years before an analyst arrives. It happens across finance ministries, central banks, statistical offices, debt management offices and audit institutions. It’s a process of data assembly, verification and presentation that most developing country governments have never had the capacity to manage systematically.

Before a rating is issued, a country’s credit story must be constructed. Fiscal data must be gathered, reform trajectories documented, institutional changes verified and contingent liabilities disclosed. A debt management office holds one part of the picture. A central bank holds another. A statistical office holds a third.

When those parts are properly coordinated, the credit story arrives at the assessment stage in verifiable form. When they are not, documentation has to be pulled together reactively before a rating deadline, and the story arrives incomplete.

Put simply, the analyst cannot reconstruct what was never assembled. Facing incomplete information, even where the core data required is broadly similar across countries, the rational response is often conservative assessment. The uncertainty premium stays elevated, and any reforms go unrecognised – not because they did not happen, but because the system required to make it visible was never built.

This upstream process can be understood as sovereign credit formation. If it’s weak, and external assessors can’t see what genuine progress has been made, there’s a formation gap. The formation gap does not mean that all low ratings are unwarranted. It simply means the system currently has no reliable way to tell the difference between a sovereign with weak fundamentals and one with strong yet largely invisible institutions.

No actor in the current system has the mandate or the incentive to build that upstream infrastructure on behalf of the countries that need it most. That is the problem.

On top of this, developing country governments are being asked to reform in ways that will take sustained investment in institutional capacity. Better data systems; coordinated institutions; clearer evidence. That investment takes years, diverts scarce resources, and demands political commitment across electoral cycles. It is being asked of governments that don’t have the fiscal space to do it – because their borrowing costs are high.

They are being asked to solve a problem they did not necessarily create, using resources that the problem itself is consuming.

The intervention that fits

Multilateral institutions, including the United Nations and multilateral development banks, cannot change what credit rating agencies do inside their own methodologies. Assessments are made independently. Interfering with the way they do it would undermine that independence.

Recent evidence in the multilateral development bank system shows that coordination is the prerequisite to movement.

Coordination across multilateral development banks and their shareholders led first to the creation of an emerging markets credit risk database, then to the formal review of multilateral development bank lending by an expert panel appointed during Indonesia’s presidency of the G20, and then to major credit rating agencies changing their methodological processes.

The infrastructure that makes governance reforms legible to credit markets is a public good. Public goods require public investment. This is not a call for a new institution. It is a reorientation of existing ones towards a gap that nobody is currently filling.

Every sovereign that has undertaken genuine reform and watched its credit conditions remain unchanged knows the problem this article describes. They are being assessed before a full appreciation of their credit worthiness is possible. Building the upstream infrastructure to close this gap is the multilateral system’s most important contribution to sovereign credit reform.

– Countries suffer when credit rating agencies lack data: how to fix the problem at source
– https://theconversation.com/countries-suffer-when-credit-rating-agencies-lack-data-how-to-fix-the-problem-at-source-279671