Africa’s holistic economy is ailing from the poor pronouncements made by the major international rating agencies and this has been echoed multiple times by many experts,
The resolution passed by AU Finance Ministers to setup an independent African Rating Agency was pronounced months ago to endorse the move needed to bypass the continuous unfair ratings of 54 African states by the Big three Rating Agencies – Moody’s, Fitch and S&P.
This bold and very important step is an effort orchestrated from inception by the African Peer Review Mechanism (APRM), which is a branch of the AU formed to improve governance across the continent. The AU’s new agency would craft its own investors risk lending assessment for African countries and it would be based on the continent, said Misheck Mutize, lead expert for country support on rating agencies with the African Union (AU).
In line with the above shifting paradigm, key players of the EUREKA Association formed in 1954 and led by its President Mr Guy Van der Beken and headquartered in Brussels, Europe with offices in other locations as US, Asia and Africa, wrote a significant scientific paper last year that received recognition from several countries and renowned people inclusive of Dr. Henry Kissinger.
The scientific book of over 500 pages entitled:
New Economic System 3.0 – Sustainability Macroeconomics with Green Rendite authored by the Secretary General of ARA Prof. Platzer, has been nominated for the 2023 official Noble Prize for Economic Sciences. It is key to note that
two relevant chapters of the book are dedicated to the creation of the independent African Rating Agency (ARA).
To establish this goal of rating Africa from ground zero with a unique bouquet of assessment models and expertise, Eureka has forged strategic collaboration with the State of the African Diaspora (SOAD) led by the Prime Minister – His Excellency, Dr. Louis-Georges Tin. Eureka also has put in over €30million to finance the setup of a Syndicate for the Rating Agency which includes but not limited to IT specialists for Hardware (Interface), IT programmers for Software (Algorithm and Source Code) and high-ranking economists inside a leading team of Analysts all working to fulfill the ambitious targets for the implementation of the rating agency.
In order to drive key indigenous talent contributions to the project and sector, the initiative will kick start an academy to train Africans to operate the ARA regional offices and for good reasons too.
Within the modeled framework of the ARA-SOAD analytical system, besides the existing key performance indicators, they have created a new scoring system for
the rating of a nation and their leading industries using Environmental Impact (i.e, Resources Allocations), Innovation Dynamics, Social Responsibilities (e.g., CC in times of Colonialism and Slavery, or relationship between Employer and Employees) and also Transparency Indicators.
By applying better transparency assessments, closer access to the market and its leading companies using a decentralization concept, ARA offers nations undergoing the assessment the possibility to score additional points for a better
Rating inclusive of strategic consulting services which provides for a game changer and realities based win-win for mutual investment engagement as regards the continent’s offerings connecting with the needed financial inflows. The ARA System working closely with SOAD will erode the lingering colonial and prejudicial policies of the big three, S&P, Fitch and Moody’s.
Recently the UN Economic Development in Africa 2023 report affirms that the African continent can become an important participant in global supply chains and it definitely needed to be after surviving the aftershocks of the Covid19 plandemic and currently reeling from the Russo-Ukrainia conflict.
Africa is recorded to have at least a fifth of the world’s reserves in a dozen key metals critical for the energy transition and sovereignty that will drive her future industrial capacity and competitiveness. But the fact remains that the continent needs significant investments in infrastructure and sociopolitical stability to strengthen its economic position for the growth direly desired. It cannot be swept under the rug that
Africa’s holistic economy is ailing from the poor pronouncements made by the major international rating agencies and this has been echoed multiple times by many experts, inclusive of Modibo Mao Makalo, the Malian economist. In a recent exposé with Sputnik Africa, he expressed these woes.
The Big three agencies, very easily analyze African states as insolvent and financially non-viable, making certain loans quite particularly difficult to access and their rating reports have come at a hugely negative cost for the continent. This has caused many Investment opportunities slip away due to continuum of downgrades.
The dearth of finance driven opportunities due to the poorly adjusted ratings from the three largest rating agencies have unfortunately cost Africa as much as $75 billion in lost revenue, according to the United Nations Development Program (UNDP). This is a very sizable inflow that would have been used for socio-economic investments on the continent and advancement of the human capital pool.
Certainly just like the AU, ARA and SOAD have taken the bull by the horn and are determined to remedy this ratings gap for Africa’s sustainable development in line with the 2063 vision to shape the fortunes of the African continent which is home to the world’s youngest workforce.
Nearly thirty countries on the African continent have seen their ratings downgraded according to a UNDP study, despite that Africa has some countries with the highest growth rates in the world and this has proven that the criteria employed to rate developed countries cannot be the same to be used for emerging economies.
African economies and companies would based on the unbiased business intelligence at ground zero like to show investors more reliable ratings that reflect undisputable reality, by not comparing industrialized countries to middle income or low-income countries on the same criteria.
ARA and SOAD through this forged initiative are working based on the above principles whilst reaching out strategically to all African Governments and strategic industrial giants on the continent to deliver the assessment of their ratings on the case by case investment potential to grow opportunities for profitability of all stakeholders.
@ Hon. Minister Ebube George Ebisike