APRM Criticises Afreximbank Credit Downgrade by Fitch Ratings, Cites Analytical Flaws
The African Peer Review Mechanism (APRM) has strongly criticised Fitch Ratings for its recent downgrade of the African Export-Import Bank (Afreximbank), describing the move as “legally incongruent and analytically flawed.”
In a statement issued on June 6, the APRM took issue with Fitch’s decision to downgrade Afreximbank’s long-term foreign currency issuer rating from ‘BBB’ to ‘BBB-’ with a negative outlook. The ratings agency attributed the downgrade to a rise in the Bank’s estimated non-performing loan (NPL) ratio to 7.1%, citing sovereign exposures to Ghana, South Sudan and Zambia as key contributors.
However, APRM contends that Fitch’s interpretation of Afreximbank’s sovereign lending portfolio disregards the unique legal framework underpinning the Bank’s operations. It argues that loans extended to member states such as Ghana and Zambia are not governed by commercial credit norms but by intergovernmental agreements under the 1993 Treaty establishing Afreximbank.
“The assumption that Ghana, South Sudan and Zambia would default on their loans to Afreximbank is inconsistent with the 1993 Treaty establishing the Bank, to which Ghana and Zambia are both founding members, shareholders and signatories,” the APRM stated.
It further pointed out that no formal default or repudiation of obligations by the said countries had occurred. As such, categorising these loans as non-performing is inaccurate and legally unfounded.
“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,” the statement read.
APRM warned that Fitch’s approach risks undermining confidence in African-led financial institutions and could distort investor perceptions by mischaracterising intergovernmental loan discussions as indicators of credit distress.
The Mechanism urged Fitch Ratings to revise its assessment methodology and engage more closely with African institutions to ensure that credit evaluations are informed by legal realities and regional contexts.
“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 noted.
It concluded by emphasising the importance of fair and context-sensitive credit assessments in ensuring Africa’s equitable treatment in global financial markets.
