African Currents

Fitch's Downgrade of Afreximbank Reveals Deeper Issue of Systemic Rating Bias

11:00, 1 July 2025
Chimauchem Nwosu
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A recent controversial credit slash by Fitch Ratings has sparked concern among experts, who warn it could make financing more expensive for African countries. They claim the decision ignored international standards and treaty-backed loan guarantees.
Sputnik
Concerns over non-performing loans have led to a controversial downgrade of the Africa Export-Import Bank by a Western-based credit rating agency. The rating cut implies weakened creditworthiness and raises questions about the institution’s stability.
However, the African Union's African Peer Review Mechanism (APRM) disagrees with the move. They contend that the bank’s performance data paints a much healthier picture, noting a non-performing loan ratio of just 2.44 percent as of December 2023—well below the 10 percent assumption used in the downgrade.
APRM also emphasizes that over 80 percent of the bank’s sovereign exposures are backed by intergovernmental treaties and preferred creditor status, which significantly lowers default risk. The African credit monitor is now calling for dialogue and corrections to protect Africa’s financial standing.
To understand the deeper issues behind the recent credit rating decision, African Currents welcomed Dr. Misheck Mutize, Lead Expert for Country Support on Rating Agencies at the African Peer Review Mechanism, for an expert perspective on the assumptions behind the downgrade and the pushback it has triggered.

"Fitch misread the rating for the bank. And the underlying assumptions that they made to effect that downgrade were not substantiated. The three areas that we disputed in Fitch's rating are Firstly, Fitch downgraded Afreximbank based on the non-performing loans criteria [...]. So, our major point of dispute was that those loans cannot be classified as non-performing loans because these loans were made to the shareholders, who are the borrowing states, who are also founding members of the bank. Fitch also discredited the application that Afreximbank had made in classifying those loans as performing, which Fitch disputed, [saying] that they are not going to recognize the accounting criteria that was applied by Afreximbank, which is the International Financial Reporting Standards No. 9. They were disputing that the Afreximbank's status of preferred creditor has been lifted," Dr. Mutize expressed.

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