President William Ruto has called for reforms in the global credit rating to realise economic growth and financial independence among African nations.
Speaking on Friday during the presidential breakfast on the sidelines of the 38th Ordinarily African Union Assembly in Addis Ababa, President Ruto explained that the system is based on flawed models and undermines Africa by offering distorted ratings, exaggerated risks and high borrowing costs.
He added that such systems deter investments for the continent; citing that biased credit ratings have cost the continent Ksh.9.6 trillion in lost opportunities.
In retrospect, Ruto noted that implementing reforms in the credit rating system could unlock Ksh.2 trillion in additional funding for Africa.
“In a continent abundant with natural wealth, vast arable land, billions in diaspora remittances, and the world’s largest carbon sinks, credit rating agencies have delivered 94 per cent of all downgrades in the past decade, while arbitrarily designating only two African nations as investment grade,” he said.
The head of state rallied other African leaders to hold rating agencies to account and demand accurate standards. He termed the current situation as a straightjacket imposed on Africa.
He noted that the credit rating system should be objective, transparent and replicable, adding that “I see the role of the Africa Credit Rating Agency as one of the demystifying and democratising sovereign credit assessments.”
Since assuming office, Ruto has been on a clarion call for reforms within the global financial system to assist African nations in restructuring their debts by providing valid ratings.
President Ruto is joined by other African heads of state in Addis Ababa, Ethiopia for the upcoming elections of the African Union Commission chairperson and his deputy.
Former Prime Minister Raila Odinga represents Kenya, who is contesting against Djibouti’s Mahmoud Ali Youssouf and Richard Randriamandrato of Mauritius.
