Afreximbank cuts ties with Fitch, exposing a fault line in global finance

The months-long standoff between the African Export-Import Bank, or Afreximbank, and credit ratings agency Fitch has now ended in a clean break. Last week, Afreximbank severed ties with Fitch, saying the agency’s analysis no longer reflected “a good understanding of the Bank’s Establishment Agreement, its mission and its mandate.” Soon after, on Wednesday, Fitch released its latest rating of the lender — a downgrade to junk status — citing concerns about how the bank’s loans to governments would be treated in future debt restructurings. This capped off a dispute that has quietly exposed deeper tensions in global development finance — not only over how African institutions are assessed by international ratings agencies, but over some more fundamental questions: What exactly counts as a multilateral development bank, and what protections come with that status? At the heart of the dispute is a concept known as preferred creditor status. In simple terms, multilateral development banks are typically treated as senior creditors, meaning their loans are expected to be repaid even when countries restructure their debt. That status is central to how MDBs operate, how they raise capital, and how investors assess their risk. Cairo-based Afreximbank, which has $40 billion in assets and contingencies, has argued that it falls squarely into that category, with its preferred creditor status embedded in its founding treaty. Fitch, however, has been less than convinced. The tension became visible after Ghana defaulted on its sovereign debt in 2022, raising questions about how the country’s roughly $750 million in obligations to Afreximbank would be treated. The issue wasn’t just technical. In a debt workout, some lenders are typically forced to take losses or accept delayed repayment, while others are shielded. Whether Afreximbank belonged in the protected category suddenly mattered a great deal. If the bank were treated like a preferred creditor, its loans would be expected to be repaid in full. If not, it could be asked to absorb losses alongside other lenders — a prospect that would have implications not just for Ghana, but for how investors view Afreximbank’s risk profile more broadly. At the same time, sovereign lending represents only a small share of Afreximbank’s overall business. The bulk of its portfolio is in trade finance and private-sector lending, which has continued to perform strongly — a distinction supporters say has been lost amid the focus on Ghana. That context did little to blunt the market reaction. In June 2025, Fitch downgraded Afreximbank, pointing to the possibility that its loans could be caught up in sovereign restructurings. Afreximbank pushed back strongly, arguing that this misrepresented its legal status and mandate. Then, quietly, in late December, Ghana and Afreximbank reached an agreement on the debt. The terms were not made public. But reporting since has suggested that Afreximbank may have accepted some form of concession — a development that, for critics, reinforced doubts about whether the bank truly enjoys preferred creditor treatment. Conflicting views For some observers, that concession was the smoking gun. If a lender takes losses in a sovereign restructuring, their argument goes, it is difficult to square that with the idea of preferred status. Afreximbank and its supporters — which include the African Union — see it differently. They argued that choosing to work with a bank member country during a crisis does not amount to giving up legal protections — and pointed to past cases where the bank has pursued repayment through formal legal channels when necessary. From that perspective, flexibility is a policy choice, not a sign of diminished status. “It is up to Afreximbank … how they decide to work with Ghana to make sure that Ghana repays,” Hannah Ryder, CEO of international development consultancy Development Reimagined, told Devex. “They’ve said they are working with Ghana to try and find a solution. And I think that’s good enough, while still respecting what they are meant to do from the shareholders and member states’ perspective, which is to protect their capital,” she said. Ryder’s comments reflect a wider frustration among African institutions over how international ratings agencies assess risk. “When a credit rating departs from fact-based, issuer-engaged analysis intended to inform investors, and instead relies on speculative or prejudicial assumptions, it undermines its core purpose,” the African Peer Review Mechanism, an AU-backed governance and accountability body, said in a statement. “In such circumstances, an issuer is fully within its rights to discontinue the rating relationship.” Still, other experts argued the picture is murkier. “From some perspectives, Afreximbank can be seen as acting a little bit more like a commercial bank than as a development institution,” said Chris Humphrey, a senior research associate at ODI Global. “It’s not clear cut — you can make arguments on both sides,” he said. Afreximbank’s Ghana loan included tranches priced between roughly 6.5% and 9.5% interest, according to Reuters, compared with World Bank financing that typically carries concessional rates of around 1% to 3%. “Other creditors, especially other official creditors who are lending at much lower rates to the same countries and who are themselves taking haircuts, they might look at Afreximbank and say, ‘Why should you be protected when you lent at twice the interest rate that we lent at?’” Humphrey added. A system without rules For Humphrey, the deeper problem is that the debate exists at all. “MDBs are unregulated … there’s no external standard to refer to. At the end of the day, the real ambiguity lies within this informal system of preferred creditor treatment,” he said. That lack of clarity has left room for conflicting interpretations. Some place weight on who owns a lender or how it is set up legally; for example, whether shareholders include private players. Others focus more on how the institution actually operates — including the types of loans it makes and the terms attached to them. Resolving that ambiguity would likely require coordination among official creditors — including the Paris Club, the International Monetary Fund, and the Global Sovereign Debt Roundtable — to agree on clearer principles for how preferred creditor treatment should work in practice. Whether that happens anytime soon is uncertain. The Group of 20 largest economies — often seen as the natural forum for such discussions — is chaired this year by the United States, where reform of the global debt architecture is not expected to be a priority, Humphrey said. There has been some movement within the Paris Club to clarify approaches, Humphrey said, but for now, the question remains largely unresolved. Putting the ‘big three’ on notice Both Humphrey and Ryder pointed out that Fitch — one of the “big three” credit rating agencies alongside Moody’s and S&P — has faced particularly sharp criticism. “Fitch does have a reputation for giving African sovereigns lower ratings than the other agencies,” Ryder said, citing her own research on how ratings methodologies are applied across the continent. But the issue goes far beyond any single firm. The Afreximbank dispute has reopened long-standing frustrations over how African risk is assessed more broadly. Today, every African country except Botswana and Mauritius remains rated below investment grade — a reality that persists despite many countries’ repayment records. This has culminated in the push to create an African credit rating agency, AfCRA, backed by the African Union, which is expected to begin operations soon. Supporters say the goal is not to replace the major agencies, but to introduce a counterweight — one that better reflects African institutions, risks, and realities. “This is a warning sign to the ratings agencies that they need to better understand African perspectives, be more transparent about their methodologies, and rethink how they assess African banks and sovereigns,” Ryder said. “The big three do need to sit up and pay attention.”