AU Body Disagrees with Moody’s Positive Rating on Kenya: A Deep Dive into Africa’s Credit Rating Dilemma 🇰🇪📉
In early 2025, global credit rating agency Moody’s positive rating on Kenya revised Kenya’s economic outlook from “negative” to “positive,” citing signs of stabilizing public finances, improving debt management, and ongoing structural reforms. The upgrade was met with enthusiasm by the Kenyan government, with President William Ruto describing it as a strong endorsement of his administration’s economic agenda. For many in Nairobi, the rating served as a signal of international confidence in Kenya’s fiscal direction and investor appeal.
However, the optimistic tone was not universally shared. The African Peer Review Mechanism (APRM)—a governance and accountability body under the African Union—swiftly criticized the revision, calling it “premature and irresponsible.” APRM officials argued that Moody’s assessment overlooked persistent socio-economic challenges, such as rising living costs, public discontent, and limited job creation. They also questioned the accuracy and neutrality of externally driven ratings that, in their view, lack a comprehensive understanding of Africa’s complex socio-political landscapes.
This disagreement has reignited a broader and long-standing conversation across the continent about the influence of Western-based credit rating agencies and their role in shaping African economic narratives. Critics argue that agencies like Moody’s, S&P, and Fitch often apply rigid, risk-averse criteria that do not fully account for domestic progress or context. Their assessments can directly impact borrowing costs, foreign investment flows, and perceptions of stability—often with profound consequences for emerging African economies.
The incident has fueled renewed calls for Africa-led credit evaluation systems, grounded in local realities and long-term development goals rather than external financial metrics alone. As debates intensify, the clash between Moody’s and the APRM reflects a deeper struggle over who gets to define economic credibility on the continent—and what metrics truly matter in measuring African progres.
What Are Credit Ratings and Why Do They Matter? 📊
Credit ratings are evaluations issued by agencies such as Moody’s, Fitch, and Standard & Poor’s. These ratings assess the likelihood that a borrower—whether a government or corporation—can repay its debts.
For countries like Kenya, credit ratings can mean the difference between affordable financing and expensive borrowing. A higher rating tends to attract international investors and lowers interest rates, while a downgrade can discourage investment and lead to capital flight. Click The African Union (AU) has expressed disagreement with Moody’s recent positive rating on Kenya,
Moody’s January 2025 Upgrade: What Changed? 🇰🇪
On January 24, 2025, Moody’s upgraded Kenya’s outlook from “negative” to “positive” while maintaining its sovereign credit rating at Caa1. This essentially indicated that although Kenya remains in the “junk” category, its fiscal management showed signs of improvement.
The rating agency cited:
Moody’s decision to revise Kenya’s outlook to “positive” was largely driven by a combination of key fiscal improvements. The country has shown improved liquidity, stemming from more effective debt management strategies that have reduced short-term refinancing pressures. Additionally, stronger tax revenues—bolstered by aggressive collection efforts and a broader tax base—have enhanced the government’s ability to meet its obligations. Perhaps most critically, Moody’s cited Kenya’s increasing fiscal discipline, reflected in spending reforms, reduced budget deficits, and greater policy consistency. Together, these developments signaled to the agency that Kenya is on a more sustainable economic path.
These were interpreted as signals that Kenya might be on a path toward greater macroeconomic stability.
Moody’s positive rating on Kenya :Why Did the AU’s APRM Object? 🚫
Just four days after Moody’s announcement, the APRM issued a stern press release accusing the agency of speculative assessments that do more harm than good. The AU body specifically questioned why Moody’s had downgraded Kenya just months earlier in July 2024, when there was “no fiscal justification” for the negative outlook at the time.
The APRM argued:
- Moody’s initial downgrade was based on political events—namely, anti-government protests—not economic data.
- The subsequent upgrade essentially admitted the previous mistake without accountability.
- Such erratic ratings distort Africa’s access to international credit markets.
Timeline of Moody’s Ratings on Kenya (2023–2025) 🕒
| Date | Action by Moody’s | Outlook |
|---|---|---|
| July 2023 | Warning on Eurobond buyback | Speculative |
| July 2024 | Downgrade | Negative |
| Jan 2025 | Outlook revision | Positive |
This back-and-forth has fueled skepticism about the objectivity and consistency of global rating agencies when dealing with African economies.
What is the African Peer Review Mechanism (APRM)? 🌍
The APRM was established in 2003 as a specialized entity of the AU to promote good governance and inclusive economic development across African states.
Its responsibilities include:
- Reviewing member countries’ governance and economic performance.
- Promoting transparent, self-assessment mechanisms.
- Calling out external entities that may harm the continent’s financial reputation.
By criticizing Moody’s, the APRM is asserting Africa’s right to fair and balanced economic analysis, rooted in local contexts and realities.
The Bigger Picture: Credit Ratings and African Sovereignty 🧭
The Moody’s-APRM disagreement taps into a deeper issue: economic sovereignty.
For years, African governments have complained that:
Critics of global credit rating agencies argue that their methodologies often rely on Western-centric benchmarks that fail to consider the unique economic and political complexities of African nations. These agencies are frequently accused of issuing downgrades based on geopolitical biases, rather than grounded assessments of a country’s actual financial health. As a result, negative outlooks can trigger capital flight, deter foreign investment, and lead to currency depreciation—amplifying the very instability they claim to measure. For many African policymakers and economists, this highlights the urgent need for more context-sensitive and transparent rating frameworks driven by regional expertise.
The Eurobond selloff in 2023, after Moody’s questioned Kenya’s debt buyback plan, resulted in:
- A spike in interest rates on Kenyan bonds.
- Depreciation of the Kenyan shilling.
- Reduced investor confidence.
Case Study: Moody’s and Nigeria 🇳🇬
Moody’s positive rating on Kenya :In early 2023, Moody’s downgraded Nigeria’s rating to Caa1 due to uncertainties ahead of general elections. This move sparked similar criticism from local authorities and financial analysts.
Just months later, after President Bola Tinubu implemented bold economic reforms, the agency reversed course and upgraded Nigeria’s outlook to “positive.”
This mirrors Kenya’s experience and raises important questions:
- Are African economies being penalized for political noise?
- Do rating agencies wait too long to acknowledge improvements?
The APRM says yes.
Why a Local Rating Agency Might Help 📌
The African Union and economic blocs like ECOWAS and EAC have long considered launching an indigenous African credit rating agency.
Potential Benefits:
- Localized expertise: Analysts who understand African economies better.
- Contextual analysis: Ratings that factor in informal economies and unique fiscal environments.
- Reduced bias: Less geopolitical influence.
An African rating agency could also balance or even challenge ratings from Western firms, offering global investors a second opinion.
Kenya’s Public Debt: A Pressing Issue 💰
As of early 2025, Kenya’s public debt stands at KSh 10.3 trillion, expected to rise to KSh 13.2 trillion by 2027. Roughly KSh 6 trillion of this is domestic debt, and the debt servicing cost consumes over 60% of total revenue.
This debt load limits:
- Government spending on social services.
- Infrastructure investment.
- Support for economic recovery post-pandemic.
While Moody’s upgrade suggested that Kenya’s repayment capacity was stabilizing, the APRM insists the real picture is more complex.
International Institutions Weigh In 🏦
Economic Experts React 🧠
Prof. James Mwakali, Economist at UoN:
“Moody’s has a tendency to move quickly based on sentiment, not long-term economic data. Kenya’s fundamentals are still shaky.”
Susan Mwihaki, Credit Analyst:
“An African rating system would offer a needed balance. Agencies like Moody’s contribute to Africa’s rising debt by making credit costlier.”
IMF Consultant (Anonymous):
“The problem isn’t Moody’s alone. Africa needs to build a credit framework that values nuance. A default in Europe is treated differently than in Africa.”
Public Perception in Kenya 🗣️
Moody’s positive rating on Kenya :Kenyans on social media and local forums have been divided. Some welcomed Moody’s vote of confidence. Others sided with the AU, arguing that foreign firms have too much influence over Kenya’s economic destiny.
Common sentiments include:
- “Moody’s is trying to clean up their mess after hurting our bond market.”
- “The AU should create its own rating agency.”
- “Our government shouldn’t celebrate—our debt is still growing!”
A Continent-Wide Challenge 🌐
Kenya is not alone in facing this dilemma. Other African countries—including Ghana, Zambia, and Ethiopia—have faced credit downgrades that many consider harsh or ill-timed.
In Ghana’s case, a downgrade preceded its default on external debt, raising questions:
- Did the downgrade accelerate the crisis?
- Could a local agency have offered a more constructive view?
These questions remain unanswered but echo across ministries of finance throughout the continent.
Towards an African Financial Identity 🧾
The AU has proposed the formation of a continental credit rating agency under the African Financial Architecture. It would function independently and feed into broader efforts like the African Continental Free Trade Area (AfCFTA) and the African Central Bank.
Who Should We Trust? 🤔
This debate isn’t just about Kenya. It’s about who gets to define Africa’s financial reputation.
While Moody’s and similar agencies have deep institutional expertise, their objectivity in African contexts is increasingly under scrutiny.
The AU, through APRM, is sending a clear message:
Africa must not be at the mercy of institutions that don’t fully understand or appreciate its economic and political dynamics.
For Kenya, the path forward involves not just improving its fiscal discipline, but also participating actively in shaping how its story is told—at home and abroad.
Conclusion ✍️
The clash between Moody’s and the APRM underscores a fundamental challenge: how Africa is judged in global financial circles. While Kenya’s positive credit outlook offers a ray of hope, the African Union’s response is a sobering reminder that African economies must take control of their financial narratives.
As the continent pushes for homegrown solutions—including a local credit rating system—the dream of a fairer, more accurate portrayal of Africa’s economies may soon become a reality.
