The African Peer Review Mechanism has criticised the recent downgrade of the African Export-Import Bank (Afreximbank) by global credit rating agency Fitch Ratings, describing the decision as flawed and legally unsound.
Fitch last week downgraded Afreximbank’s long-term issuer default rating from ‘BBB’ to ‘BBB-’ with a negative outlook, citing rising credit risks and concerns over the bank’s risk management practices.
Central to the downgrade was Fitch’s estimate that Afreximbank’s non-performing loans had reached 7.1%, surpassing the 6% high-risk threshold in its rating criteria.
However, in a statement released on Sunday, the APRM, an African Union agency that supports AU member states in governance self-monitoring and reviews strongly disputed Fitch’s methodology, particularly its classification of sovereign loans to Ghana, South Sudan, and Zambia as non-performing.
“This classification raises critical legal, institutional and analytical issues which the APRM strongly contests,” the statement read. “Fitch’s treatment is inconsistent with the 1993 Treaty establishing Afreximbank, to which Ghana and Zambia are both founding members and shareholders.”
According to the APRM, Fitch’s estimate significantly overstates risk compared to Afreximbank’s own reported NPL ratio of 2.44%. The agency said Fitch’s methodology failed to recognise the preferred creditor status and legal framework that governs loans between Afreximbank and its member states, one based on mutual cooperation, not typical market risk assumptions.
“It is legally incongruent to classify loans to member states as non-performing when no formal default has occurred, and the borrower countries remain shareholders in the lender institution,” the APRM stated.
Fitch’s analysis had flagged exposures to Ghana (2.4%), South Sudan (2.1%), and Zambia (0.2%) as non-performing—assumptions the APRM argued were based merely on debt restructuring discussions, not on actual default or repudiation.
The APRM urged Fitch to re-evaluate its criteria and engage in technical consultations with African stakeholders, warning that flawed interpretations could damage the credibility of international ratings and unfairly penalise African institutions.
Despite the downgrade, Fitch’s commentary acknowledged several strengths of the bank. It maintained a “medium” business risk profile
Fitch also projected that these ratios would remain stable through 2027, with continued 10% annual growth and capital injections under a $2.6 billion capital increase programme approved in 2021.
In contrast to Fitch’s stance, China Chengxin International Credit Rating Co., Ltd (CCXI) earlier this year assigned Afreximbank an ‘AAA/Stable’ rating the highest possible citing its growing regional influence and solid financial foundation. This made Afreximbank the first African multilateral institution to receive a AAA rating from CCXI.
The bank has also revealed plans to access the Chinese Panda bond market in 2025, aiming to raise capital for deepening China-Africa trade and investment ties.
