“Four Rungs Too Low”: Standard Bank CEO Slams Africa’s Credit Ratings Gap
Standard Bank Group CEO Sim Tshabalala has joined a rising chorus of African leaders questioning the accuracy and fairness of sovereign credit ratings issued by the world’s largest agencies, warning that flawed assessments are costing African countries billions in borrowing costs.
“Our statistical work suggests that the average African sovereign is rated four rungs below what their fundamentals would imply,” said the chief executive of Africa’s largest bank by asset value adding that the continent is being systematically undervalued.
He pointed to South Africa, the continent’s most industrialized economy, as a case in point. If Standard Bank’s internal model were applied, South Africa’s credit rating would rise from BB- to BBB—cutting its annual borrowing costs by nearly $3 billion.
The critique adds weight to longstanding concerns that Fitch, Moody’s, and S&P Global—known as the big three ratings agencies—lack deep, localized expertise in African economies. Analysts and policymakers alike have argued that this leads to risk overestimation and unjustifiably high debt servicing costs for African nations.
Big Three, Big Blind Spots?
Tshabalala’s remarks come amid renewed scrutiny of the big three New York-based ratings giants, whose assessments often dictate the terms of African nations’ access to global capital markets. The agencies have been criticized for applying rigid frameworks that fail to capture the nuance of emerging markets, particularly in Africa.
“There is a premium on local knowledge,” Tshabalala said. “But it’s not always reflected in their evaluations.”
This growing frustration is prompting action. The African Union is set to launch its own sovereign credit ratings agency later this year, aiming to challenge the dominance of the big three by introducing more transparent, Africa-grounded assessments.
Still, Tshabalala urged realism about its impact: “If Africa set up its own rating agency, how long would it take before it gained the credibility similar to the credibility that the big three have?”
Geopolitics, Tariffs, and the AGOA Question
Beyond the ratings debate, Tshabalala also highlighted broader geopolitical headwinds facing African economies, including the shifting trade landscape with the United States.
His team is modeling scenarios based on possible tariff changes, particularly in light of rising protectionism from Washington. “We spend a lot of time on it,” he said, referencing U.S. tariff proposals ranging from modest hikes to sweeping increases floated by former President Donald Trump on what he called “Liberation Day.”
Standard Bank estimates that if a 10% blanket U.S. tariff were imposed on exports, the impact on Africa would be “not so bad.” But more aggressive measures could shave up to 1.5 percentage points off Africa’s expected 4% GDP growth in 2025.
AGOA in the Crosshairs
With the African Growth and Opportunity Act (AGOA) facing potential expiration, Tshabalala warned that key sectors like agriculture, automotive manufacturing, and mining in South Africa could face serious disruptions if the trade deal is not renewed.
Yet he remains cautiously optimistic. South Africa retains leverage due to its global dominance in rare earths and platinum—minerals critical to the clean energy transition and global tech supply chains.
“The negotiations are ongoing,” Tshabalala said, hinting at the quiet diplomacy underway behind closed doors in Pretoria and Washington. But the stakes are high. A weakened or expired AGOA could upend years of trade gains just as African economies strive for post-pandemic recovery and debt sustainability.
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