African leaders push for risk pricing rethink, fresh investment at France Africa summit

(Reuters) – African leaders will use a two‑day summit in Nairobi with French President Emmanuel Macron ‌to make a fresh push on rethinking how to price risk on the continent and unlock investment flows into key sectors, Kenya’s foreign minister said.

U.N. Secretary-General Antonio Guterres and delegations from more than 30 African states are attending the Africa Forward summit, hosted by Kenyan President William Ruto and Macron. Among the heads of state confirmed to attend are the presidents of Botswana, Ivory Coast, Nigeria, Senegal and Zambia.

Macron, who chairs meetings of rich countries this year as holder of the rotating presidency of the G7, has said he wants to improve access to finance for Africa. France regularly convenes summits with African states, though this is the first it has held in a predominantly English-speaking country.

Kenya’s Foreign Minister Musalia Mudavadi told Reuters a focus will be on how to price risk, so that African states are no longer penalised by the perception they are riskier than peer countries.

“Africa has always been regarded as a high-risk area. And therefore access to credit, both for governments and for businesses, has always been pegged at higher interest rate,” Mudavadi said in an interview.

“We need to address that. We need to have a situation where the financial markets globally start looking ‌at Africa differently.”

Conflicts such as the war in the Middle East show all regions carry risk, and Africa should not be judged disproportionately, he said.

Conflict risk “was the excuse that was always bandied about Africa. But now it is clear that we have to have a relook at how we assess Africa,” he said.

African leaders have long argued that global credit rating agencies overstate the continent’s risk, driving up borrowing costs and deterring investment.

Major credit rating agencies including S&P Global Ratings, Moody’s and Fitch reject accusations of regional bias, saying their ratings are based on globally applied, publicly disclosed criteria.

The African Union aims to set up a continental credit ratings agency that supporters say will provide a more accurate assessment of African risk. Mudavadi called the effort “critical”.

The African Export-Import Bank, a continent-wide lender mainly owned by African governments, severed ties with Fitch in January over the ratings agency’s approach to assessing its risk.

Mudavadi said the presence of global and regional lenders at this week’s summit, including the European Bank for Reconstruction and Development and the African Development Bank, would support the effort.

“This dialogue should help produce better financing mechanisms to support Africa so that jobs can be created on the African continent.”