Today, CABRI hosted its 9th Network Engagement for Public Debt Managers in Africa under the theme: “Charting a Path for Africa: Rebuilding Toward Investment-Grade Credit Rating.” Attended by public debt managers across Africa, the network engagement aimed to support progress toward achieving credit upgrades to investment-grade status across African economies.
Credit ratings are a vital tool for investors assessing a borrower’s capacity and commitment to repay debt. Over the past few decades, many African countries have increasingly accessed international capital markets to fund infrastructure and budgetary requirements. However, external shocks such as the COVID-19 pandemic, geopolitical tensions, and global commodity price volatility, amongst others, have exacerbated fiscal pressures and contributed to sovereign rating downgrades across the continent. Only two African countries, Botswana and Mauritius remained and retained their investment-grade credit ratings despite these pressures, reflecting stronger institutional frameworks and more resilient macroeconomic fundamentals.
Dr Kay Brown, Executive Secretary of CABRI asked a pertinent question: “What concrete steps must Africa take to collectively position the continent for an investment-grade future?”
Presenting a case study on “Achieving Macroeconomic and Fiscal Resilience” with a focus on Botswana and Mauritius, Anthony Julies, a South African independent ratings expert discussed the best practices which assisted these two countries to reflect long-term stability, especially during the COVID-19 pandemic. The findings are that Botswana holds significant fiscal and institutional strength, whereas Mauritius has institutional strength.
Jasper Siegfried, Managing Director at the Lion's Head Global Partners in the United Kingdom, reiterated that both Botswana and Mauritius were able to finance the COVID-19 pandemic without borrowing. Due to their small economies in the African scale, both countries capitalised on their niche, Botswana being tourism and mining while Mauritius has tourism and its offshore financial sector to rely on.
Moreover, the government involves and where necessary, educates key stakeholders, including the media with coherent and consistent policy messages on sovereign credit rating outcomes. Therefore, clear, transparent, communication plays a strategic role in allowing for public participation, and the articulation of views on progress regarding a country’s economic reform agenda.
Discussions further unpacked:
- How to enhance sovereign creditworthiness in Africa;
- How to enhance engagement between African sovereign and credit rating agencies and
- How to enhance market resilience in Africa.
The network engagement gathered a rich line of speakers from the Sovereigns Fitch Ratings, S&P Global Ratings, Sovereign Africa Ratings as well as the Standard Bank Group, Rand Merchant Bank, Johannesburg Stock Exchange and the Metropol Corporation Ltd.