African Institutions Push Back on Fitch’s Downgrade of Afreximbank

The African Export-Import Bank (Afreximbank) has strongly rejected Fitch Ratings’ recent downgrade, reaffirming its financial resilience and governance standards. The downgrade to ‘BBB-’ with a negative outlook, issued on 4 June 2025, has ignited a wider debate over how African multilateral financial institutions are assessed by global rating agencies.

The African Peer Review Mechanism (APRM)—the African Union’s governance and credit rating oversight body—has joined the Bank in condemning Fitch’s rationale, calling the downgrade “flawed,” “analytically unsound,” and “legally incongruent.”

Disputed Non-Performing Loan (NPL) Classification

At the heart of the dispute lies the treatment of sovereign exposures to Ghana, Zambia, and South Sudan. Fitch classifies these loans—amounting to approximately 4.7% of Afreximbank’s portfolio—as non-performing, thereby estimating a 7.1% NPL ratio, far above the 2.44% reported by Afreximbank.

The Bank, which adheres strictly to International Financial Reporting Standards (IFRS), including IFRS 9, considers such classification inaccurate and misaligned with its legal obligations under its founding treaty. The 1993 Establishment Treaty, ratified by 53 African states, grants Afreximbank preferred creditor status and mandates that it does not participate in debt restructuring negotiations.

“Fitch’s downgrade is hinged on the erroneous view that the treaty establishing Afreximbank can be ignored without consequence. This treaty remains legally binding and governs all financial interactions between the Bank and its member states,”
— Afreximbank statement, 10 June 2025

AU Response: Misunderstanding African Legal Frameworks

The APRM, citing its AU mandate to review credit assessments, strongly condemned Fitch’s interpretation of Afreximbank’s sovereign exposures. According to the APRM, treating loans backed by intergovernmental treaties and shareholder equity stakes as commercial liabilities reflects a fundamental misunderstanding of Africa’s development finance architecture.

“Loans extended by Afreximbank to its member countries are governed by a framework of intergovernmental cooperation, not typical market risk norms. Fitch’s unilateral classification is both misleading and legally unsound,”
— APRM Statement, 9 June 2025

The APRM further noted that none of the affected sovereigns have formally defaulted or repudiated their obligations to the Bank. Rather, invitations to discuss repayments have been misinterpreted as signs of impending default.

Financial Resilience and Risk Mitigation

Despite Fitch’s downgrade, the agency acknowledged Afreximbank’s:

• High collateralisation levels

• Strong equity-to-assets ratio

• Low concentration risk

• Sound treasury asset quality (liquidity rated ‘A’)

• Robust internal capital generation

These factors, according to Afreximbank, reinforce the strength of its risk management framework and its ability to absorb shocks, even in the face of potential sovereign challenges.

“Our risk provisions are forward-looking and conservative. We have already taken significant steps to mitigate credit risks, including those tied to sovereign exposures,”
— Afreximbank

Strategic Role in African Development

The downgrade comes at a time when Africa is advancing its plans for a continent-led credit ratings agency, with the APRM leading technical groundwork. The backlash against Fitch reflects growing frustration with the ‘one-size-fits-all’ methodologies of traditional rating agencies, which many African leaders argue have consistently undervalued African financial institutions.

Samaila Zubairu, Chair of the Alliance of African Multilateral Financial Institutions, warned that misclassifying sovereign-backed loans could increase borrowing costs continent-wide and undermine development financing.

“Downgrades driven by misinterpretations of African governance frameworks harm not just the institution involved but all Africans who depend on these banks to deliver development outcomes,”
— Samaila Zubairu

A Fork in the Road for Afreximbank

As Afreximbank prepares to elect a new President at the end of June, the institution finds itself at a crossroads. It must balance its bold, Africa-first lending philosophy—which has underpinned its growth to over $40 billion in assets—against external demands to conform more closely to traditional multilateral development bank (MDB) norms.

Under outgoing President Prof. Benedict Oramah, the Bank took calculated risks, such as lending to nations like Zimbabwe when other institutions hesitated. It also offered loans at higher market rates—up to 12% in some cases—prompting pushback from international creditors who argue that such pricing disqualifies Afreximbank from preferential treatment.

Yet these decisions, supporters argue, reflect an institution deeply rooted in African realities—providing access where others won’t, and trusting in Africa’s capacity for transformation.

Reclaiming African Financial Sovereignty

The backlash to Fitch’s downgrade is more than a dispute over numbers. It is a struggle over who defines risk—and whose rules govern Africa’s development journey.

As the continent pushes forward with establishing its own African Credit Rating Agency, the call is clear: Africa must not be judged solely by frameworks designed without its participation. Institutions like Afreximbank must be evaluated in light of their treaty-based mandates, governance models, and their centrality to Africa’s growth narrative.

The APRM has formally called for a re-engagement with Fitch, urging context-aware, consultative, and transparent assessments. The future of Africa’s financial autonomy may well depend on how such conversations evolve.