The African Export-Import Bank (Afreximbank) has terminated its credit rating relationship with Fitch Ratings following disagreements over the classification of some of the bank’s sovereign loan exposures.
In a statement on Friday, the Cairo-headquartered lender said the decision followed a review of its engagement with the rating agency and a conclusion that Fitch’s assessment no longer reflected “a good understanding of the bank’s establishment agreement, its mission and its mandate”
The fallout underscores growing tensions between African multilateral lenders and global credit rating agencies over how risk is assessed, particularly where treaty-based institutions are evaluated using conventional sovereign debt frameworks — a dispute with significant implications for Africa’s access to affordable capital.
“Afreximbank’s business profile remains robust, underpinned by strong shareholder relationships and the legal protections embedded in its establishment agreement, signed and ratified by its member States,” the bank said.
Last year, Fitch downgraded Afreximbank’s long-term foreign currency issuer default rating to BBB-, from BBB, and assigned a negative outlook. The agency said the move reflected the risk that debt owed to Afreximbank by some sovereign borrowers could be included in broader sovereign debt restructuring processes.
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Fitch classified Afreximbank’s exposure to Ghana — representing 2,4% of its loan book — as non-performing. Combined with other exposures Fitch also deemed non-performing, including South Sudan (2,1%) and Zambia (0,2%), the agency calculated a non-performing loan (NPL) ratio of 7,1% as at end-2024, above its 6% “high risk” threshold.
By contrast, Afreximbank reported an NPL ratio of 2,3% in 2024, down from 2,5% in 2023, excluding the Ghana, Zambia and South Sudan exposures — a divergence that lay at the centre of the dispute.
The bank sharply rejected Fitch’s treatment of the loans, arguing that its operations are governed by its founding treaty, not by external classifications.
“Accordingly, Afreximbank would like to reaffirm that it is not participating in debt restructuring negotiations related to any of its member countries. To do so would be inconsistent with the Bank establishment treaty,” it said.
Afreximbank said it operates under high standards of financial transparency and adheres to International Financial Reporting Standards, including IFRS 9.
Despite the downgrade, the bank noted that Fitch had acknowledged its financial resilience, citing high levels of collateral and credit risk mitigants, as well as substantial provisioning on certain sovereign exposures.
Fitch also recognised Afreximbank’s strong capitalisation, highlighting its solid equity-to-assets and guarantees ratio, strong internal capital generation, low concentration risk and robust liquidity position, reflected in an “a” liquidity assessment supported by high-quality treasury assets.
The African Peer Review Mechanism (APRM), an African Union agency, came out in support of Afreximbank, expressing concern over what it described as Fitch’s “misclassification” of the bank’s sovereign exposures to Ghana, South Sudan and Zambia.
The APRM said the classification raised serious legal, institutional and analytical concerns, arguing that it was inconsistent with the 1993 treaty establishing Afreximbank — to which Ghana and Zambia are founding members, shareholders and signatories.
It described the classification as “legally incongruent”, noting that no formal defaults had occurred and that none of the sovereign borrowers had repudiated their obligations.
The APRM urged Fitch to re-examine its criteria and assumptions and to engage in technical consultations with Afreximbank and other relevant African stakeholders.
The dispute has also revived broader concerns about Africa’s position in the global financial system, where countries face disproportionately high borrowing costs.
Data from the UN Economic Commission for Africa show that if Germany and Zambia each borrowed US$1 billion over 10 years, Germany would pay about US$229 million in interest, compared with roughly US$2,5 billion for Zambia.
While Germany would borrow at an interest rate of about 2,29% per annum, Zambia would face rates as high as 22,5%.
Economists say the high cost of capital has entrenched debt vulnerabilities across the continent, diverting scarce public resources away from development and towards debt servicing.
