Opinion
Africa needs its own rating agency
A good way to start redefining African risk would be for African-owned financial institutions to establish their own rating agency.
The idea that risk analysts and ratings agencies might know what is really going has long been the triumph of hope over experience. Western economies are in their fourth year of downturn since the financial experts misread the fragility of the US home loan market, then managed to wildly underestimate the implications of these financing swindles across the money markets and state treasuries of Europe. As demonstrators take to the streets in Athens, Lisbon, Madrid and London to protest state spending cuts and rising unemployment, there are plenty of lessons for African governments.
The most obvious would be to treat rating agencies with extreme scepticism. If the agencies can so fundamentally misread transactions in industrial economies with warehouses of detailed documentation, one has to question their ability to understand dynamics in Africa, where most economic activity is informal and many statistics are enlightened guesswork.
Much more practical are the projects launched by the African Development Bank (AfDB) and the Economic Commission for Africa to find new ways to measure economic activity on the continent.
