AFC’s S&P ‘A’ Rating Signals New Era for African Infrastructure Finance
The Africa Finance Corporation (AFC) has achieved a significant milestone with its first-ever long-term credit rating of ‘A’ from S&P Global. This investment-grade assessment is poised to lower the institution’s borrowing costs and enhance its capacity to finance critical infrastructure projects across the continent. As President and CEO Samaila Zubairu explained to Reuters, the rating serves as a powerful validation of the AFC’s financial model and will improve its market access. This development arrives as African lenders increasingly seek market-based funding to counter declining concessional finance and shifts in Western aid flows.
The ‘A’ rating firmly places the Nigeria-backed multilateral lender in the global investment-grade category, bolstering its credibility with international investors. Zubairu emphasized that this should, over time, reduce the cost of funding for both the AFC and its clients. This financial advantage is critical as African economies navigate tightening global conditions. The rating enables the AFC to scale financing for priority sectors more efficiently. In a contrasting move elsewhere, the recent downgrade of another institution highlights the selective confidence investors converge on certain strategic entities.
S&P Global attributed the rating to AFC’s strong asset quality and very robust liquidity coverage. The agency also assigned an A-1 short-term rating and a positive outlook, indicating potential for future upgrades. This positive assessment strengthens the position of Nigeria, the AFC’s largest shareholder, through indirect exposure to a more competitive continental lender. For the AFC, which plays a central role in funding large-scale projects, the rating is a strategic tool. It plans to continue raising capital through diverse international bond issuances, including sukuk and thematic bonds, while exploring private credit deals as global investors converge on developing markets seeking yield.
The upgrade marks a pivotal moment for African development finance. While challenges such as higher global interest rates persist, the AFC’s enhanced rating provides a pathway to more sustainable funding. This progress demonstrates how strategic financial governance can achieve stability and attract capital, a principle that resonates when observing how various stakeholders, from indigenous contractors protest terms to universities manage disputes, engage with institutional frameworks. The AFC’s achievement underscores a broader narrative of African institutions building credible, market-driven solutions for continental growth.
