Credit ratings and governance: Building trust for Africa’s financial stability

By Richard Ndebele

Africa’s post-pandemic recovery has revealed resilience and innovation, yet for many economies, credit ratings remain stubbornly low.

Despite steady growth indicators, investor confidence is still tempered by concerns over governance, policy consistency, and institutional credibility.

The reality is that in today’s interconnected markets, trust—not just capital—has become the most valuable currency.

Credit ratings, once seen as mere reflections of debt sustainability, have evolved into governance scorecards. They capture not only a country’s or corporation’s repayment capacity but also the integrity of its fiscal management, the predictability of its policies, and the transparency of its leadership. A rating is no longer just a financial number; it is a statement of confidence in how well institutions function.

Global agencies such as Moody’s, Fitch, and Standard & Poor’s have long dominated the rating landscape, but African-based institutions such as the International Credit Rating Agency (ICRA Zimbabwe) and Sovereign Africa Ratings (SAR) of South Africa are transforming the conversation by offering context-sensitive insights that reflect local realities.

These agencies are helping redefine Africa’s credit narrative—from one judged externally to one grounded in its own institutional progress. The logic is clear: when governance improves, so does creditworthiness.

This link between credit and governance was strongly underscored at the ICRA Symposium on Credit Ratings and Financial Stability, held in Harare on 16 October 2025. The symposium brought together regulators, analysts, and thought leaders—including the Insurance and Pensions Commission (IPEC), the Securities and Exchange Commission of Zimbabwe (SECZim), and Sovereign Africa Ratings (SAR)—for a candid discussion on how credit ratings can drive economic transformation.

The consensus was that Africa’s next stage of financial evolution will depend not merely on access to capital but on the quality of its institutions and governance systems. As one panellist observed, “Bad ESG is not just bad sustainability—it’s a reflection of inefficiency.” Poor environmental, social, and governance practices are often symptoms of deeper operational weaknesses that ultimately affect both financial and reputational performance. Conversely, strong ESG performance signals efficiency, discipline, and long-term vision—the very traits investors seek when allocating capital.

The symposium highlighted a critical reality: in the era of sustainable finance, credit ratings have become gateways to opportunity. Nations and corporates with sound governance and credible ratings now enjoy preferential access to climate investments, green bonds, grants, equity inflows, concessional loans, debt-for-climate swaps, and credit guarantees.

Sustainable finance is built on trust, and trust stems from good governance and transparent ESG reporting. When institutions can demonstrate measurable impact—reduced emissions, ethical labour practices, transparent financial disclosures—they attract lower borrowing costs and wider investor interest. This alignment of credit and climate underscores why governance reform is now central to Africa’s financial future.

Zimbabwe’s leadership in hosting the ICRA symposium reflected a growing regional awareness that credible domestic rating capacity is essential for attracting long-term investment. The presence of regulators such as IPEC and SECZim signified regulatory convergence, where governance, market conduct, and investor protection now share a common goal—stability built on trust.

The dialogue also reinforced the need to harmonise African rating methodologies with global standards, particularly those aligned with the International Sustainability Standards Board (ISSB) and its IFRS S1 and S2 frameworks, which integrate climate and sustainability disclosures into mainstream reporting. ICRA Zimbabwe’s commitment to align its methodologies with these standards marks an important step toward ensuring that local issuers and governments can compete for sustainable capital on equal footing.

Participants at the Harare event also noted that adopting efficiency-based environmental strategies can directly improve credit standing. The implementation of a Zero-Discharge Policy—where industries eliminate effluent and waste emissions—not only protects natural ecosystems but also enhances operational efficiency and cost control. Efficient institutions and industries experience fewer regulatory penalties, lower resource waste, and better profitability, all of which contribute to stronger credit profiles. In this way, environmental responsibility is no longer just a moral choice; it is a financial strategy that speaks to institutional discipline and foresight.

Zimbabwe’s broader reforms provide a practical backdrop for this evolving narrative. The country’s adoption of accrual-based International Public Sector Accounting Standards (IPSAS), the roll-out of ZIMCODE II governance principles, and the work of professional bodies such as CGI Zimbabwe in promoting ethical leadership and sustainability reporting are shaping a new governance culture. Each of these reforms strengthens the country’s credibility in the eyes of both domestic and international investors. When institutions function transparently, budgets are credible, and reporting is reliable, the economy’s risk premium declines—and its rating trajectory improves.

Across the continent, similar reforms are taking root. The African Union’s initiative to establish a Pan-African Credit Rating Agency and Afreximbank Africa Credit Enhancement Facility both reflect an emerging consensus: Africa must own its credit story. By building indigenous rating capacity, aligning ESG standards, and promoting cross-border cooperation among agencies like ICRA Zimbabwe and Sovereign Africa Ratings, the continent can begin to close the trust gap that has long disadvantaged African issuers in global markets. A credible African credit ecosystem would not only enhance transparency but also unlock billions in sustainable finance for infrastructure, energy transition, and climate resilience.

Ultimately, credit ratings mirror governance. Africa’s financial stability will not be achieved through bailouts or policy pronouncements, but through sustained commitment to transparency, ethical leadership, and operational efficiency. Every improvement in governance—from cleaner audits to climate-smart industrial practices—adds basis points to the continent’s collective credibility. Good governance, in this context, is more than a compliance requirement; it is Africa’s strongest form of collateral, one that earns not just capital, but confidence. And confidence, more than credit, remains the foundation of a stable and sustainable future.

Richard Ndebele is Manager: Technical, Research & Quality Assurance at the Chartered Governance and Accountancy Institute in Zimbabwe (CGI Zimbabwe) and Country Champion for the PAFA Sustainability Centre of Excellence. He writes on governance, sustainability, and public financial management in Africa.
Contact: rndebele@cgizim.org