Sovereign Credit Ratings for Sub-Saharan Africa

One of the Bush Administration's top priorities for Africa is to increase private sector investment. Africa's investment needs are enormous and far surpass resources available through traditional development assistance. Private investment, as a source of both capital and know-how, is absolutely essential for the countries of sub-Saharan Africa (SSA) to grow and develop.

With sovereign credit ratings, the governments of sub-Saharan Africa can signal to the international market their readiness to participate in the global economy by opening their books to public scrutiny, maintaining transparency, and adhering to liberalization policies and reform efforts. Additionally, credit ratings foster transparency in the collection and dissemination of information. Moreover, they will help to promote realistic monetary and fiscal policies throughout SSA, even in the face of political opposition, as countries feel the pressure to keep up with neighbors who receive sovereign credit ratings. Therefore, the dialogue between rating agencies and government officials can strengthen a government's commitment to market-oriented growth strategies and improve its credibility. The rating process, as well as the rating itself, can operate as a powerful force for good governance, sound market-oriented growth, and the enforcement of the rule of law. From a business perspective, sovereign credit ratings serve as a baseline for evaluating the economic environment surrounding investment possibilities and as a benchmark for investors to distinguish among markets, which provides valuable information and a basis for evaluating risk.

The U.S. Department of State, Bureau of African Affairs sponsored a half-day conference for sub-Saharan African nations to educate them about the benefits of, the process by which to attain, and implications of having sovereign credit ratings on April 23, 2002. At the conference, the Bureau of African Affairs announced a project to fund a number of sub-Saharan African countries in their initial attainment of a sovereign credit rating.

Fitch Ratings Ltd. won a competitive contract to conduct the ratings. Fitch is working independently with the countries selected for funding to issue the ratings. Issuance of the sovereign credit ratings will include 1) analysis of financial and economic data; 2) a trip to each country to be rated during which the representative(s) of the rating agency will speak with a range of individuals from different elements of society that have an interest in and knowledge about the country's financial and economic situation; and 3) a review with officials of the rated country of their report before the final issuance of the rating to allow for further clarification. See Fitch Sovereign Ratings for a more complete description of the rating process. The official rating includes a "letter grade" rating (e.g. AA- or BBB) on the country's ability and willingness to pay its debts and a standard written report that provides more detailed information to investors.

These ratings and reports will become available on this page as they are completed.

Prior to this initiative, only four SSA countries have received sovereign credit ratings (Botswana, Mauritius, Senegal, and South Africa). We hope that with this program we may add up to 20 countries to this list and help to integrate them into the global economy.

For questions for additional information on this program, contact Bureau of African Affairs, Office of Economic Policy, Stephen Brundage at BrundageSG@state.gov.

--  The Gambia