South Africa wins credit rating boost after two decades

Days before the G20 Leaders Summit, S&P Global lifted South Africa’s credit rating for the first time in two decades — bringing long-awaited reprieve to a country that’s highlighted Africa’s high cost of capital throughout its G20 presidency this year. South Africa’s credit rating — a key signal of how risky it is to lend to the country, and therefore how expensive its borrowing will be — was upgraded from a BB- to a BB. S&P Global cited improved tax systems, expenditure constraints, gross domestic product growth, and reform across the country’s electricity, transportation, and water systems as reasons behind the change. “While South Africa remains below investment grade, the upgrade is significant,” said Ronald Lamola, South Africa’s minister of international relations and cooperation, at a G20 press briefing. “It lowers borrowing cost, broadens the investor base, and signals renewed confidence in the country's reform trajectory.” South African President Cyril Ramaphosa described the change as a green shoot of “an emerging economic recovery,” and a change that helped South Africa showcase “a country and an economy on the rise” as the leaders of the world’s largest economies gathered in Johannesburg this past weekend. “All of these regulations are supposed to help banks manage risk,” said Olawunmi Ola-Busari, a political impact manager at The ONE Campaign. “They’re there for great purpose, and the G20 was made for financial stability. But inadvertently, in some places, [credit rating agencies] have been too stringent or too conservative, and that disincentives investments in emerging markets.” It’s a message that South Africa has been amplifying throughout its G20 presidency. One of the four major priorities of that presidency has been about making debt sustainable for low- and middle-income. Key to that, South Africa has consistently said, is dealing with the cost of capital — the price countries pay to borrow money on global markets. A G20 push The G20 commissioned a group of experts to dig into those issues, and one of their key recommendations was to better regulate credit rating agencies — the groups such as S&P Global that set standards for borrowing and lending. The experts also pushed for those agencies to reform their methodologies to better reflect the risk profiles of emerging markets, and for more consistent dialogue between credit rating agencies and regulators. That’s important, Ola-Busari explained, because traditional credit ratings often fail to include the financial solutions used by low- and middle-income countries to decrease lending risk, from partial guarantees by multilateral development banks to political risk insurance. Part of that is down to a lack of information, she added, which is why the report emphasized better data transparency and information sharing from rating agencies and governments alike. “How can you shed more light on facts like a recent IFC report, which showed that if you had invested over the last three decades in African infrastructure, you'd be making up to five times more than if you'd invested in the S&P 500?” asked Ola-Busari, referencing a finding noted in the G20-commissioned report. Other African experts have gone further, demanding that Africa create its own credit rating agency through the African Union. Earlier this year, the bloc announced that Mauritius would be the home to a new Africa Credit Rating Agency, or AfCRA, and that operations would begin during the second quarter of 2026. While G20 leaders did affirm those recommendations, it seems South Africa benefited regardless: something that Bodo Ellmers, the managing director of Global Policy Forum Europe, felt could not be a coincidence. “It looked like a demonstration of power: a credit rating agency demonstrating that it can punish but also reward a government,” Ellmers wrote in a statement to Devex. “This certainly did not help to dispel the suspicion of the UNDP and others that credit rating agencies apply subjective factors when assessing African countries.”