Research suggests that there is credence to these complaints. For example, a report from the United Nations Development Program found that the region loses almost $75 billion each year on account of higher interest rates and opportunity costs related to foregone spending. Budget allocations to debt servicing in the region now rival important public services like education and health. Kenya, for example, spends a staggering 60% of its revenue just paying its debts.In July, the African Union announced it would establish an Africa-based credit ratings agency in 2025 to help remedy this penalty. The agency will be independent of governments and is being created under the direction of the African Peer Review Mechanism, the African Development Bank, African Export-Import Bank and the African Union Commission. Some believe that African countries need a lot more than an independent credit rating agency to improve their access to global debt markets.
Governments have Long Complained about an Alleged “Africa Penalty” when it Comes to Sovereign Credit Ratings
