South Africa’s finance minister, Enoch Godongwana, has accused major international credit rating agencies of systematically undervaluing African economies, saying their assessments fail to reflect the continent’s true fiscal performance.
Speaking after presenting a budget with an improved outlook, Godongwana said he does not expect global rating firms to upgrade South Africa any time soon, despite what he argues is “clear progress”.
S&P Global currently places South Africa’s long-term foreign debt three notches below investment grade, with Moody’s and Fitch maintaining similarly low classifications. Godongwana said these agencies “are behind the curve,” arguing that South Africa’s stronger debt trajectory over the past five years is not being recognised. He added that countries with comparable fiscal metrics often receive higher ratings than African nations, despite the continent’s relatively low default rates.
The minister stressed that the bias may not be deliberate, but said it remains deeply entrenched within multinational institutions and the broader investment community. A report prepared for next week’s G20 summit in Johannesburg is expected to provide evidence supporting his claims.
Lower ratings come with steep consequences: African states face significantly higher borrowing costs than other emerging regions.
Dollar-denominated sovereign bonds from sub-Saharan Africa currently average yields of 9.1%, far above Latin America’s 6.5% and nearly double emerging Asia’s 4.7%. Several African nations — including Senegal, Gabon, Mozambique, Cameroon, Angola and the Republic of Congo — sit among the highest-spread sovereign borrowers globally.
Ghana and Zambia have also publicly condemned ratings downgrades, arguing that they scare off investors and aggravate financial crises.
Image credit: Tobias Reich
