Rated Africa: Ratings and the Development of African Financial Markets

Africa has become increasingly integrated to the global financial and economic system in recent years. This article considers the role of credit ratings in that trend. Ratings facilitate the issuance of debt by rated entities, but they serve other purposes too, such as providing a risk benchmark for economies and overcoming information asymmetries between investors and debt issuers. Although Africa can boast some of the world’s fastest growth rates, the recently strong investor demand for African debt is more likely a consequence of historically low interest rates in more developed markets. Moreover, despite encouraging progress, the continent’s financial systems remain comparatively underdeveloped.