S&P Global Ratings has issued a firm defence of its sovereign assessment methodologies regarding African nations, rejecting persistent claims by continental leaders that the agency penalises the region with inflated risk premiums. However, in a notable concession delivered on the sidelines of the G20 Summit on Friday, a top executive acknowledged that human judgment remains an inextricable component of credit analysis, fuelling the very debates regarding subjectivity that African heads of state have sought to address.
The rebuttal comes as the spotlight intensifies on the "Big Three" rating agencies—S&P, Moody’s, and Fitch—during South Africa’s presidency of the G20. A panel of experts convened by the G20 has explicitly accused these firms of exhibiting "perception biases," arguing that African nations are often assigned higher risk ratings than non-African countries with similar economic fundamentals. These ratings directly correlate to the interest rates nations pay on international debt, costing the continent billions in excess debt servicing fees annually.
Roberto Sifon-Arevalo, S&P’s global head of sovereign ratings, sought to dismantle these accusations during an interview in Johannesburg. As reported by News24 and Bloomberg, Sifon-Arevalo insisted that the agency applies a singular, transparent standard across the globe. "We don't treat Africa or Latin America or Asia — we don't treat anybody differently," he stated. He argued that the agency’s criteria have been public for decades, allowing any external observer to replicate their assessments to verify the results.
While S&P maintains that its mathematical models are colour-blind, Sifon-Arevalo admitted that the application of these models is not fully automated. "Look, we’re people, we are entitled to opinions," Sifon-Arevalo said, according to News24. "And our opinion might not be the same as others. We try to do our best." This admission touches on the core grievance of African economists: that while the data inputs may be standardised, the subjective interpretation of political risk and institutional strength often leans heavily against African governance structures.
This friction between objective data and subjective analysis is central to the "African risk premium"—a concept championed by the United Nations Economic Commission for Africa (UNECA). Critics argue that because analysts are often based in Western financial hubs, they may misinterpret local African political dynamics as instability, whereas similar dynamics in European or Asian markets might be viewed as routine democratic friction. Sifon-Arevalo countered this by suggesting that critics are often guilty of making "apples to oranges" comparisons, benchmarking African sovereigns against advanced economies that are structurally dissimilar.
The timing of these comments is significant, occurring just days after S&P upgraded South Africa’s sovereign credit rating outlook. As reported by Moneyweb, the agency raised South Africa’s foreign currency rating to "BB" from "BB-" earlier in the week, citing the Government of National Unity’s commitment to fiscal reform and structural stability. While the South African government welcomed the move, Finance Minister Enoch Godongwana had previously noted that a rating improvement would merely be a "bonus," maintaining his stance that the global financial architecture remains inherently skewed against developing nations.
The economic consequences of these ratings are severe. A report by the Africa Peer Review Mechanism (APRM) and the United Nations Development Programme (UNDP), cited by Nairametrics, estimates that biased grading processes have cost African economies approximately $75 billion in lost funding opportunities and excess interest payments. The G20 expert panel has urged the world’s major economies to increase oversight of credit rating agencies to mitigate these opaque methodologies.
For now, S&P remains steadfast that its current systems are equitable. Yet, by acknowledging the role of human opinion in a process that determines the financial fate of nations, the agency has inadvertently validated the calls for greater diversity and localised understanding within the global financial assessment architecture.
