Birth of African ratings agency likely to challenge the norm

Forget the so-called big three – Moody’s, Standard and Poor’s (S&P) and Fitch credit ratings – said to control around 95% of the credit ratings in the world financial markets.

A new kid on the block – Sovereign Africa Ratings – has officially been launched in Johannesburg on Friday, with respected political scientist, Professor Steven Friedman from the University of Johannesburg, saying the move was long overdue.

Addressing the inaugural sitting of the SAR, Friedman said: “Why has there not been an African rating agency before?

Said Friedman: “The reason assumed that sovereign ratings are not something that Africans ought to be involved in – a territory of people who are on the other side of the colonial divide and viewing themselves as being superior – is that behind that colonial thinking is 

“The big three sovereign rating agencies are viewed as people who know how to rate economies and if you have to prove yourself to be in their level, you have to prove to be as smart as they are and that your methods are as sophisticated as they are.”

Said SAR chief operating officer Zwelibanzi Maziya: “We are the first credit rating in Africa providing a sovereign rating.

“This day is quite significant because we are bringing a new opinion if not new, an additional one, which is much needed in the investing market.

“It is helping the issuance in the sense of providing a new perspective – intended to provide stability in the bond markets, as well as for the investing community who will get a new perspective that will aid them in their investment research.”

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Asked on how SAR would be received by international markets, given the dominance of Moody’s, Standard and Poor’s; and Fitch, Maziya said: “We are a new player and we have to establish ourselves in the market.

“We intend on using our research to speak for itself and we are counting on any critique from any market participants – definitely looking at any commentary coming from them.

“In terms of other rating agencies who have been around for a long time – aware that they have been imbedded in certain legislations – we are expecting the market to take time to the presence of a new player.

“From one of the things that Professor Steven Friedman said was that we are viewed as incompetent as Africans in general – and therefore, certain expertise should be left to the West and North America.

“However, if you look at the international credit rating agencies – especially when operating outside of the US – they usually use locals as their analysts.

“For example, in South Africa, you have Africans working for S&P – as well as Moody’s.

“They are quite aware that skills are available outside of America and given the fact that we are in Africa – we will be using Africans as well.

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“We are not worried about the skills sect. We are expecting the challenge – confident in our resources.”   

-brians@citizen.co.za