Experts have warned that Africa loses about 75 billion dollars annually due to biased credit ratings that inflate borrowing costs and hinder investment on the continent.
The warning was issued during a two-day conference held on Wednesday in Dakar, Senegal.
The event was jointly organised by AfriCatalyst, the South African Institute of International Affairs (SAIIA), the United Nations Development Programme (UNDP), and the African Union Development Agency–NEPAD (AUDA-NEPAD).
The conference brought together policymakers, economists, and financial experts from across West Africa to discuss how Africa can strengthen its influence in global financial and climate governance. Participants also explored ways to ensure the continent’s priorities are reflected in key international forums, including the G20, the Fourth International Conference on Financing for Development (FfD4), and COP30.
Discussions focused on achieving fairer access to capital, promoting fiscal resilience, and reforming global financial systems that have historically disadvantaged developing nations.
A key highlight was the joint presentation by UNDP and AfriCatalyst on the Africa Credit Ratings Initiative, a regional framework aimed at reducing Africa’s reliance on external rating agencies that often overstate risk and increase borrowing costs.
According to estimates presented at the summit, biased credit ratings cost the continent an estimated $74.5 billion annually through higher interest payments, reduced investment inflows, and limited fiscal space for essential services and infrastructure.
Ms. Catherine Phuong, UNDP Resident Representative in Senegal, said political commitments must translate into tangible outcomes, including project pipelines and measurable results.
“Aligning incentives between policymakers, markets, and think tanks is critical to lowering Africa’s cost of capital,” she said.
Dr. Bartholomew Armah, Chief Economist at AUDA-NEPAD, revealed that Africa’s external debt stock reached $863 billion in 2023, equivalent to 169 per cent of total exports.
He noted that with average bond yields at 9.8 per cent, debt-service payments now consume 16 per cent of export revenues, draining resources meant for development.
“Addressing illicit financial flows, which cost the continent an estimated $88 billion annually, and establishing regional financing mechanisms such as the African Monetary Fund and the African Stability Mechanism, are crucial to restoring fiscal stability,” Armah added.
Dr. Daouda Sembene, Chief Executive Officer of AfriCatalyst, said South Africa’s upcoming G20 presidency presents a unique opportunity to ensure African perspectives are reflected in global economic decision-making.
“The voice of the Global South must be heard and prioritised,” Sembene said.
Speakers at the conference also called for coordinated regional reforms, including the strengthening of domestic capital markets, empowering regional development banks, and promoting fairer assessments of African economies’ creditworthiness.
Participants noted that 25 African countries are currently in debt distress, up from nine in 2012 — a situation crowding out vital investments in health, education, and climate adaptation.
They emphasised the need for greater transparency in global financial governance and stronger regional cooperation to ensure reforms deliver measurable, inclusive, and sustainable development outcomes.
The conference concluded with a collective appeal for “strategic coherence and relevance” in Africa’s engagement on global platforms, urging the continent to move beyond participation towards achieving tangible economic results.
