The Fitch Ratings logo is seen at their offices at Canary Wharf financial district in London. Photo by: Reinhard
Krause / Reuters
The months-long standoff between the African Export-Import Bank, or Afreximbank, and credit ratings agency
Fitch has now ended in a clean break.
Last week, Afreximbank severed ties with Fitch, saying the agency’s analysis no longer reflected “a good
understanding of the Bank’s Establishment Agreement, its mission and its mandate.” Soon after, on Wednesday,
Fitch released its latest rating of the lender — a downgrade to junk status — citing concerns about how the bank’s
loans to governments would be treated in future debt restructurings.
This capped off a dispute that has quietly exposed deeper tensions in global development finance — not only over
how African institutions are assessed by international ratings agencies, but over some more fundamental questions:
What exactly counts as a multilateral development bank, and what protections come with that status?
At the heart of the dispute is a concept known as preferred creditor status. In simple terms, multilateral development
banks are typically treated as senior creditors, meaning their loans are expected to be repaid even when countries
restructure their debt. That status is central to how MDBs operate, how they raise capital, and how investors assess
their risk.
Cairo-based Afreximbank, which has $40 billion in assets and contingencies, has argued that it falls squarely into
that category, with its preferred creditor status embedded in its founding treaty. Fitch, however, has been less than
convinced.
The tension became visible after Ghana defaulted on its sovereign debt in 2022, raising questions about how the
country’s roughly $750 million in obligations to Afreximbank would be treated. The issue wasn’t just technical. In a
debt workout, some lenders are typically forced to take losses or accept delayed repayment, while others are
shielded. Whether Afreximbank belonged in the protected category suddenly mattered a great deal.
If the bank were treated like a preferred creditor, its loans would be expected to be repaid in full. If not, it could be
asked to absorb losses alongside other lenders — a prospect that would have implications not just for Ghana, but
for how investors view Afreximbank’s risk profile more broadly.
At the same time, sovereign lending represents only a small share of Afreximbank’s overall business. The bulk of its
portfolio is in trade finance and private-sector lending, which has continued to perform strongly — a distinction
supporters say has been lost amid the focus on Ghana.
That context did little to blunt the market reaction. In June 2025, Fitch downgraded Afreximbank, pointing to the
possibility that its loans could be caught up in sovereign restructurings. Afreximbank pushed back strongly, arguing
that this misrepresented its legal status and mandate.
Then, quietly, in late December, Ghana and Afreximbank reached an agreement on the debt. The terms were not
made public. But reporting since has suggested that Afreximbank may have accepted some form of concession — a
development that, for critics, reinforced doubts about whether the bank truly enjoys preferred creditor treatment.
Conflicting views
For some observers, that concession was the smoking gun. If a lender takes losses in a sovereign restructuring,
their argument goes, it is difficult to square that with the idea of preferred status.
Afreximbank and its supporters — which include the African Union — see it differently. They argued that choosing to
work with a bank member country during a crisis does not amount to giving up legal protections — and pointed to
past cases where the bank has pursued repayment through formal legal channels when necessary. From that
perspective, flexibility is a policy choice, not a sign of diminished status.
https://www.devex.com/news/afreximbank-cuts-ties-with-fitch-exposing-a-fault-line-in-global-finance-111787
“It is up to Afreximbank … how they decide to work with Ghana to make sure that Ghana repays,” Hannah Ryder,
CEO of international development consultancy Development Reimagined, told Devex.
“They’ve said they are working with Ghana to try and find a solution. And I think that’s good enough, while still
respecting what they are meant to do from the shareholders and member states’ perspective, which is to protect
their capital,” she said.
Ryder’s comments reflect a wider frustration among African institutions over how international ratings agencies
assess risk.
“When a credit rating departs from fact-based, issuer-engaged analysis intended to inform investors, and instead
relies on speculative or prejudicial assumptions, it undermines its core purpose,” the African Peer Review
Mechanism, an AU-backed governance and accountability body, said in a statement. “In such circumstances, an
issuer is fully within its rights to discontinue the rating relationship.”
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Still, other experts argued the picture is murkier.
“From some perspectives, Afreximbank can be seen as acting a little bit more like a commercial bank than as a
development institution,” said Chris Humphrey, a senior research associate at ODI Global. “It’s not clear cut — you
can make arguments on both sides,” he said.
Afreximbank’s Ghana loan included tranches priced between roughly 6.5% and 9.5% interest, according to Reuters,
compared with World Bank financing that typically carries concessional rates of around 1% to 3%.
“Other creditors, especially other official creditors who are lending at much lower rates to the same countries and
who are themselves taking haircuts, they might look at Afreximbank and say, ‘Why should you be protected when
you lent at twice the interest rate that we lent at?’” Humphrey added.
A system without rules
For Humphrey, the deeper problem is that the debate exists at all.
“MDBs are unregulated … there’s no external standard to refer to. At the end of the day, the real ambiguity lies
within this informal system of preferred creditor treatment,” he said.
That lack of clarity has left room for conflicting interpretations. Some place weight on who owns a lender or how it is
set up legally; for example, whether shareholders include private players. Others focus more on how the institution
actually operates — including the types of loans it makes and the terms attached to them.
Resolving that ambiguity would likely require coordination among official creditors — including the Paris Club, the
International Monetary Fund, and the Global Sovereign Debt Roundtable — to agree on clearer principles for how
preferred creditor treatment should work in practice.
Whether that happens anytime soon is uncertain. The Group of 20 largest economies — often seen as the natural
forum for such discussions — is chaired this year by the United States, where reform of the global debt architecture
is not expected to be a priority, Humphrey said.
