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AFC‘s ‘A’ Credit Rating by S&P: A Game-Changer for African Infrastructure Financing
The Africa Finance Corporation (AFC) has recently achieved a significant milestone by securing a long-term ‘A’ credit rating from S&P Global. This upgrade is expected to reduce AFC’s borrowing expenses and enhance its capacity to finance critical infrastructure projects across the African continent.
Significance of the New Credit Rating
Samaila Zubairu, AFC’s President and CEO, revealed in an interview with Reuters that this is the first time S&P has rated the institution. The ‘A’ rating firmly positions AFC within the global investment-grade category, boosting its credibility among international investors and potentially unlocking access to more affordable capital.
This development is particularly timely as African financial institutions increasingly turn to market-based financing to compensate for the decline in concessional loans and diminishing aid from Western countries.
CEO’s Perspective: Validation and Opportunity
Zubairu described the rating as a strong endorsement of AFC’s financial robustness and operational framework. He emphasized that the investment-grade status will open doors to better market access, which should gradually lower funding costs for AFC and its clients across Africa.
“This rating confirms our strength and should translate into more competitive financing options,” Zubairu stated. He further noted that reduced borrowing costs will enable AFC to expand its support for priority sectors amid tightening global financial conditions affecting African economies.
Key Factors Behind the Rating
S&P Global highlighted AFC’s solid asset quality and exceptional liquidity coverage as pivotal reasons for the rating. Alongside the long-term ‘A’ rating, AFC received an A-1 short-term credit rating and a positive outlook, signaling the possibility of future upgrades.
- AFC already holds an A3 rating from Moody’s, an AAAspc rating from S&P Ratings (China), and an A+ rating from the Japan Credit Rating Agency.
- The positive outlook reflects expectations that AFC will broaden its sovereign shareholder base over time.
- Currently, Nigerian entities, including the Central Bank of Nigeria (CBN) and financial institutions, hold approximately 75% of AFC’s shares, underscoring Nigeria’s dominant influence.
In contrast, other African development banks like Afreximbank have faced downgrades, with Fitch lowering its rating to junk status after the bank ended its relationship with the agency.
Why This Upgrade Matters for Africa
The improved credit rating arrives at a crucial juncture when African development finance institutions are grappling with rising global interest rates, increased credit risks, and shrinking concessional funding sources.
- Being investment-grade enhances AFC’s ability to raise capital internationally at lower interest rates.
- Lower funding costs can be passed on as more affordable long-term loans for infrastructure, energy, and industrial projects continent-wide.
- The rating bolsters confidence in African-led financial institutions, which is vital as external development finance becomes scarcer.
For Nigeria, AFC’s largest shareholder, this upgrade indirectly strengthens the country’s stake in a more resilient and competitive pan-African lender.
AFC’s Role and Future Outlook
AFC is a multilateral development finance institution focused on infrastructure investment across Africa. In 2025, the corporation invested nearly $4 billion in various projects, and Zubairu anticipates maintaining or exceeding this level in 2026 due to a robust project pipeline.
Priority investment areas include gold mining, critical minerals, renewable energy, and fertilizer production, aligning with Africa’s abundant natural resources and industrial development needs.
One notable project is AFC’s financing of the Lobito Corridor, a U.S.-supported railway connecting copper mines in Zambia and cobalt fields in the Democratic Republic of Congo to Angola’s Lobito port. This corridor is expected to stimulate mining and agricultural activities in the region.
To fund its operations, AFC plans to continue issuing international bonds such as sukuk, panda, and samurai bonds. Additionally, it is exploring private credit funding opportunities as global investors seek higher returns in emerging markets.
Looking Ahead: Strengthening Africa’s Financial Landscape
The S&P rating upgrade not only affirms AFC’s financial health but also signals growing investor confidence in African development finance institutions. As the continent faces evolving economic challenges, AFC’s enhanced creditworthiness will be instrumental in mobilizing the capital needed to drive sustainable growth and infrastructure development.
With this new rating, AFC is well-positioned to support Africa’s ambitious development agenda, fostering economic resilience and integration across the region.
