Ratings Bias Costs Africa Billions of Dollars, Standard CEO Says
- Calls grow to change how credit-rating companies assess risk
- AfDB, African Union plan to roll out African rating agency
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African countries face higher costs of financing because of inflated risk perceptions from credit-ratings companies, the head of the continent’s biggest bank said.
A United Nations Development Programme study last year showed that subjective risk assessments by ratings companies resulted in $75 billion of added costs and foregone revenue by African countries, Standard Bank Group Ltd. Chief Executive Officer Sim Tshabalala said at a Future Investment Initiative Institute conference in Riyadh on Monday. He described the added costs as “preposterous” and “unconscionable.”