Low credit ratings for African countries are leading to high borrowing costs and liquidity challenges. This is according to panellists at a plenary session on harnessing sovereign credit ratings power for Africa’s economic transformation, organised by the Economic Commission for Africa at the 2024 African Economic Conference (AEC) in Gaborone, Botswana.

Zuzana Schwidrowski, Director of the ECA’s Macroeconomic, Finance and Governance Division at the ECA said low credit ratings contribute to high borrowing costs and more broadly to a vicious spiral of liquidity challenges as well as debt accumulation for African countries. Despite the overall challenges in credit ratings, she emphasized some positive developments and turnarounds in selected credit ratingtrajectories of African sovereigns, such as Moody’s upgrade of Tanzania or S&Ps positive outlook on South Africa. However, the overall double-digit inflation prevents African Central Banks to reduce policy rates, which is another factor behind high borrowing costs and overall subdued growth, especially among resource (and fuel)-intensive exporters.


In her presentation on credit ratings in Africa, Sonia Essobmadje, Chief of ECA’s Innovative Finance and Capital Markets Section, said, “Improving Africa’s fundamentals and implementing a structural reform program would certainly over time contribute to better ratings, but more importantly to sustainable, inclusive growth and the well-being of the population. The development of African national and regional financial markets should be a priority, as this would reduce excessive dependence on external debt and improve the transmission of monetary policy.”

Misheck Mutize, Lead Expect on Credit Ratings, African Union cautioned that excessive reliance on credit ratings can amplify market instability and lead to pro-cyclicality. Interestingly, it is a rule under the EU Regulation 1060 of 2009, adopted following the crisis, that sovereign credit ratings should only be published on a Friday after close of business to avoid market disruptions and overreactions as well as reduce asymmetric information, as different markets are open at different times. This practice gives the investors a chance to digest the information and undertake their own analysis over the weekend.”

For his part, Marcus Courage, CEO of Africa Practice, said recent analysis and data collected by Africa Practice and Africa No Filter indicates that stereotypical media narratives about Africa are costing African nations $4.2 billion a year in inflated interest on sovereign debt due to poor international media coverage, often underpinned by conflict and war.

Daniel Cash, a non-resident Fellow at UNU-CPR, said, “To overcome the current ‘credit rating impasse’, large-scale architectural reform is needed. African countries need support and investment from partners to inject knowledge, skills, and nuance into their capacity to navigate the credit rating process.

“Now is the time for partners to come together and offer a unified service to African Countries, and the rest of the Global South, so that the new environment that surrounds them need not be so punitive and regressive,” he added.

SOURCE:https://brandspurng.com/2024/11/27/low-credit-ratings-for-african-countries-see-high-borrowing-costs-and-liquidity-challenges/

Ftc

As banks refuse to lend to innovative ideas to start or expand businesses, the economy is feeling the heat. These issues all co joined to cause the high level of unemployment and under employment facing the country.

ok

nurey:
As banks refuse to lend to innovative ideas to start or expand businesses, the economy is feeling the heat. These issues all co joined to cause the high level of unemployment and under employment facing the country.

Please kindly tell us the banks you applied for loan that they failed to approve the loan for you and tell us about the innovative ideas you brought out to the particular bank that was disregarded.

Thanks

Borrow borrow make me fine

omoadeleye:




Please kindly tell us the banks you applied for loan that they failed to approve the loan for you and tell us about the innovative ideas you brought out to the particular bank that was disregarded.

Thanks

😂😂😂😂😂

omoadeleye:




Please kindly tell us the banks you applied for loan that they failed to approve the loan for you and tell us about the innovative ideas you brought out to the particular bank that was disregarded.

Thanks

Lol..

Innovative ideas ma foot..

Don’t be surprised guy man wan start to dey sell drugs with borrowed money..

omoadeleye:




Please kindly tell us the banks you applied for loan that they failed to approve the loan for you and tell us about the innovative ideas you brought out to the particular bank that was disregarded.

Thanks

Thank you for asking
2016 BOI agriprenuer training to be given 3m naira from Heritage bank.

The business idea was to plant plantain market half raw and process half into plantain chips.

I didn't collect the loan because
1. I was asked to find 2 sureties with 1.5m each to stand for me.
2. Later it was reduce to 750k each for the two sureties.

The agreement from BOI was to use our NYSC certificate as collateral for the 3m.

Not everything on Nairaland is cruise.

So where is the innovative idea as you claimed?

[quote author=nurey post=133072379]

H

Free Africa

Quintuple:
So where is the innovative idea as you claimed?

If my idea wasn't innovative then
1. BOI would not pick me for training and spending $300 to train me for 3months

2. I would not pass to the next stage of reimbursement by talking to the bank

If you want to see the innovative idea, bring 500k that's how much my business plan is worth today.

nurey:


If my idea wasn't innovative then
1. BOI would not pick me for training and spending $300 to train me for 3months

2. I would not pass to the next stage of reimbursement by talking to the bank

If you want to see the innovative idea, bring 500k that's how much my business plan is worth today.

With your last statement, i have to believe you that you truly have innovations

nurey:
As banks refuse to lend to innovative ideas to start or expand businesses, the economy is feeling the heat. These issues all co joined to cause the high level of unemployment and under employment facing the country.

Don't blame the banks Blame the federal government

The interest rate CBN gives loans to bank is too high to take a gamble with unproven businesses.. As a businessman banks want to choke me with loan offers

It is government that sets out certain amount to banks at very low interest give this loans to people who meet so and so criterias... This is what I have been shouting here

nurey:


Thank you for asking
2016 BOI agriprenuer training to be given 3m naira from Heritage bank.

The business idea was to plant plantain market half raw and process half into plantain chips.

I didn't collect the loan because
1. I was asked to find 2 sureties with 1.5m each to stand for me.
2. Later it was reduce to 750k each for the two sureties.

The agreement from BOI was to use our NYSC certificate as collateral for the 3m.

Not everything on Nairaland is cruise.

So who is to be blame here?

You or Heritage bank?

omoadeleye:




So who is to be blame here?

You or Heritage bank?

So after promising that my NYSC discharge certificate is my collateral and then asking me to find sureties with like sum as collateral, nah me dey at fault 😂

The most important thing is that I am in a better place, I hold no grudge

Some people here are speaking out of sheer ignorance and an intent to play politics and defend government ineptitude

Hmmm

Bad government policies leads to this

Lionize:
Some people here are speaking out of sheer ignorance and an intent to play politics and defend government ineptitude

Everything to them is politics, Tinubu ineptitude must be defended at all damn cost