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Downgrading Africa’s Development

During the COVID-19 pandemic, more than 60% of African sovereigns have suffered credit-rating downgrades that risk exacerbating the immediate crisis. Ratings agencies should instead pursue a more balanced approach that accounts for increases in credit risk without undermining developing countries’ economic prospects.

CAIRO – In 2020, the COVID-19 pandemic triggered Africa’s first recession in a quarter-century and, with it, an avalanche of sovereign credit-rating downgrades across the region. Eighteen of the 32 African countries rated by at least one of the “big three” agencies – Fitch Ratings, Moody’s, and S&P Global Ratings – suffered downgrades that risk exacerbating the immediate crisis. Moreover, the ratings agencies’ actions could undermine the longer-term structural transformations needed to reduce these economies’ unhealthy commodity dependence.