As debates around Africa’s cost of capital, sovereign risk perceptions and global financial reform continue to grow, questions are increasingly being raised about the role of international credit rating agencies in shaping how African economies and institutions are assessed in global markets. For African multilateral financial institutions (AMFIs), these ratings directly influence access to finance and the cost of raising capital for development across the continent.

A new report by Development Reimagined explores how disagreements between global credit rating agencies are increasing borrowing costs for African multilateral financial institutions (AMFIs), including Afreximbank, Africa Finance Corporation and Trade and Development Bank.

Titled The Africa Disagreement Tax: Rating Agency Divergence, Timing Effects, and the Financial Cost of African Multilateral Institutions, the report examines how divergent ratings from the “Big Three” agencies — Fitch Ratings, Moody’s and S&P Global Ratings — are creating additional financial burdens for African institutions that are not experienced by comparable institutions in other regions.

Because investors and regulators often rely on the lowest available rating, even a one-notch downgrade can significantly increase borrowing costs. Drawing on 25 years of ratings and bond issuance data across more than 70 sovereigns and institutions, the report estimates that this “Africa Disagreement Tax” has cost African institutions up to US$440 million over the past decade.

The report also identifies how timing effects and delayed rating adjustments further increase financing costs for African institutions, while contributing to wider discussions around global financial governance reform, credit rating transparency, and ongoing efforts to strengthen African-led financial institutions and rating systems.

Read the full report to explore the data, findings and recommendations shaping the conversation around Africa’s cost of capital and the future of global credit rating systems.