By Dr. Macharia Kihuro
In a recent public statement, the African Export-Import Bank (Afreximbank) announced it would terminate its credit rating relationship with Fitch Ratings. The rationale for this decision was particularly striking. The bank attributed the move to its “firm belief that the credit rating exercise no longer reflects a good understanding of the Bank’s Establishment Agreement, its mission, or its mandate.” It further emphasized that its business profile remains “robust, underpinned by strong shareholder relationships and the legal protections embedded in its Establishment Agreement” which is a treaty signed and ratified by its member states.
At the core of this disagreement is a long-simmering debate: should rating agencies apply a single, rigid methodology to all banks, or should their approach be adapted to the specific nature of the institution? More precisely, should a commercial bank be assessed using the exact same framework as a multilateral development bank (MDB)? Afreximbank contends that Fitch Ratings failed to account for this critical distinction, producing an assessment the bank views as an unfair misrepresentation of its true credit standing.
Fitch’s methodology, as outlined in its “Bank Rating Criteria,” employs a two-part framework for both commercial banks and MDBs. The first is a Core Quantitative Model (CQM), a standardized formula calculating a “Viability Rating” based on financial metrics like asset quality and capital adequacy. This serves as the initial anchor. The second component is the “Support Rating” framework, where external support is evaluated. Here, theoretically, the distinction is made: for MDBs like Afreximbank, support is assessed as the collective, contractual commitment of its member states under its Establishment Agreement that is considered extremely strong and reliable. For high-quality MDBs, Fitch often uses a “credit substitution” approach, anchoring the MDB’s rating to the creditworthiness of its strongest shareholders.
The pivotal rupture occurred on January 28, 2026, when Fitch downgraded Afreximbank to ‘BB+’ from ‘BBB-‘ and subsequently withdrew all ratings. This action pushed the bank’s long-term issuer default rating into non-investment grade (“junk”) territory. Afreximbank responded decisively by terminating the relationship, stating it viewed the agency’s methodology as flawed, damaging to its mission, and indicative of a broader bias against African financial institutions.
This confrontation forces a critical examination of enduring tensions in global finance: Are international rating agencies’ methodologies inherently biased against African institutions? Or did Afreximbank misunderstand the framework and overreact? Ultimately, the central question concerns real-world impact: What will be the consequences of this dispute for the bank, the continent’s financial architecture, and the credibility of global rating standards?
Is Afreximbank an isolated case? Emphatically, no. A longstanding and widespread sentiment across Africa holds that the methodologies of the “Big Three” rating agencies (Fitch, Moody’s, and S&P) are systematically biased, fail to account for unique regional contexts, and produce unfairly punitive ratings. The agencies offer robust counter-arguments, creating a classic “dialogue of the deaf.”
Ghana has regularly contested downgrades. In 2022, after a series of downgrades to “junk” status, its government suspended formal engagement with all three major agencies, accusing them of pro-cyclical actions that worsened its debt crisis. Notably, Fitch’s rationale for Afreximbank’s recent downgrade was anchored in Ghana’s 2023 debt restructuring, applying a principle that links an MDB’s risk to its member states.
Kenya, Rwanda, Nigeria, and South Africa have all formally appealed ratings decisions. Among the most vocal critics is the African Development Bank (AfDB), whose former President, Akinwumi Adesina, spearheaded a high-profile campaign condemning international credit ratings for African nations as “arbitrary, biased, and subjective.”
This debate yields critical lessons. A substantive problem has been identified: the persistent gap between agency assessments and client realities, exacerbated by a communication breakdown. This is not an isolated incident but a continent-wide challenge.
The path forward demands concrete action. Stakeholders must collaborate to build a system ensuring both fairness and credible risk assessment. This rupture exposes a global architecture failing to adequately incorporate emerging market perspectives. That friction must now catalyze a genuine dialogue, leading to mutually accepted methodologies. Furthermore, collective action is critical. Through the African Union or other pan-African platforms, a unified bloc should negotiate for tailored, publicly disclosed criteria for African MDBs and sovereigns with strong governance, demanding clarity on how qualitative factors are scored.
Dr. Macharia Kihuro (PhD) is a development finance expert with extensive experience across Sub-Saharan Africa.
