The African Peer Review Mechanism (APRM) has taken a strong stance against Fitch Ratings following the agency’s recent decision to downgrade the African Export-Import Bank (Afreximbank).

APRM described Fitch’s interpretation of Ghana’s sovereign loan as a “non-performing asset” as both legally incongruent and analytically flawed. This confrontation signals growing concern over how global rating agencies assess African-led financial institutions and the implications such evaluations have on the continent’s financial credibility.

Fitch Ratings, in its latest review, downgraded Afreximbank’s long-term foreign currency issuer rating from ‘BBB’ to ‘BBB-’ with a negative outlook. The downgrade was largely attributed to an estimated 7.1% non-performing loan (NPL) ratio, with Ghana, South Sudan, and Zambia cited as contributing significantly to the bank’s credit stress.

APRM’s Legal and Analytical Rebuttal

However, APRM strongly disagrees with Fitch’s categorization of Afreximbank’s loans to these nations as risky. In a statement dated June 6, the continental governance institution defended the legal structure under which Afreximbank operates. It clarified that loans extended to member states like Ghana and Zambia are governed not by typical commercial credit norms, but by a unique set of intergovernmental agreements.

“The assumption that Ghana, South Sudan, and Zambia would default on their loans to Afreximbank is inconsistent with the 1993 Treaty establishing the Bank. These countries are not only borrowers but also founding members, shareholders, and signatories to the treaty.”
APRM

Importantly, the APRM noted that no formal default has occurred in relation to any of the loans. It stressed that classifying these facilities as non-performing undermines the very essence of multilateral development banking, particularly in cases where sovereign borrowers are also stakeholders in the lending institution.

“It is legally incongruent to classify a loan to member countries as non-performing, especially when the borrower states are shareholders in the lender institution, no formal default has occurred and none of the sovereigns have repudiated the obligation.”
APRM

Misinterpretation of Intergovernmental Negotiations

The APRM emphasized that Fitch’s treatment of the matter shows a lack of appreciation for the legal and operational context in which African financial institutions operate. In particular, the body criticized Fitch for misconstruing Ghana, South Sudan, and Zambia’s engagement with Afreximbank over loan repayments as an indication of impending default or an attempt to lift the Bank’s Preferred Creditor Status.

“Fitch has misinterpreted the invitation extended by Ghana, South Sudan and Zambia to Afreximbank to discuss the loan repayments as signalling an intention to default and/or to lift the Preferred Creditor Status.”
APRM

Beyond the technical and legal discrepancies, APRM raised concerns about the broader implications of Fitch’s assessment. Mischaracterizing such loans, it warned, could distort investor perceptions and erode trust in African financial institutions. At a time when African economies are seeking more independence and innovation in financing their development, unjust downgrades could unfairly penalize countries striving to maintain transparency and financial stability.

Call for Context-Sensitive Credit Assessments

“Transparent and context-intelligent credit assessments are vital for fair treatment of Africa in global finance,” APRM concluded, urging Fitch Ratings to reconsider its approach. The institution called for deeper engagement between credit rating agencies and African multilateral banks to ensure assessments are grounded in a full understanding of regional legal frameworks and development mandates.

This development highlights ongoing tensions between African institutions and international credit rating agencies, particularly around the framing and interpretation of financial risk. As Africa continues to expand its financial architecture through institutions like Afreximbank, the APRM’s critique serves as a reminder of the need for a more equitable and informed global financial system—one that recognizes the continent’s legal complexities and development priorities.