The African Peer Review Mechanism (APRM), the African Union’s governance and credit rating watchdog, has criticised Fitch Ratings for what it called a “flawed” downgrade of African Export-Import Bank, arguing the agency misclassified sovereign-backed loans as non-performing.
Fitch lowered Afreximbank’s long-term foreign currency issuer default rating to ‘BBB-’ from ‘BBB’ on June 4, citing a rise in non-performing loans (NPL) and concerns about the lender’s risk management.
The agency pegged the bank’s NPL ratio at 7.1 percent, driven largely by its classification of loans to Ghana, South Sudan and Zambia as impaired.
But the APRM said the actual NPL ratio stood at 2.44 percent and rejected Fitch’s assumptions, calling them “analytically and legally unsound.”
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Ghana and Zambia are both founding members and shareholders of the Cairo-based lender, and bound by a 1993 multilateral treaty that governs Afreximbank’s financial operations.
“By virtue of this treaty, loans extended to member countries are governed by intergovernmental cooperation and mutual commitment—not commercial risk norms,” the APRM said in a statement dated June 6. “Classifying these loans as non-performing, despite no formal default or repudiation, is legally incongruent.”
The watchdog warned that Fitch’s methodology reflects a “misunderstanding of the governance architecture of African financial institutions” and risks undermining development finance on the continent.
It urged the agency to consult with Afreximbank and other African stakeholders to ensure “objective, transparent and context-intelligent” credit assessments.
Afreximbank plays a central role in financing trade and development across the continent, particularly in supporting sovereigns with limited access to global capital markets.
The downgrade could increase the bank’s funding costs and weigh on its ability to execute its mandate.
The APRM, mandated by African heads of state to monitor governance and credit rating practices affecting the continent, has frequently challenged global rating agencies over what it sees as systemic bias and a lack of contextual understanding in their treatment of African institutions.
Fitch has not publicly responded to the APRM’s criticism.
