Fitch Ratings recently downgraded the African Export-Import Bank (Afreximbank) to BBB-, just above junk status, citing increased risks from sovereign loan restructurings. The African Peer Review Mechanism (APRM) disputed the decision, arguing Fitch misclassified restructuring requests as defaults. However, evidence suggests otherwise—South Sudan defaulted, Zambia halted repayments in 2021, and Ghana has taken a similar stance, all meeting Fitch’s criteria for non-performing loans.
The downgrade highlights concerns over Afreximbank’s unconventional approach. Under outgoing President Benedict Oramah, the bank has pursued aggressive growth, lending to high-risk borrowers like Zimbabwe and prioritizing commercial ventures (92% of its portfolio) over sovereign projects. While this strategy has expanded its assets from $7 billion to $40 billion since 2015, it has also drawn criticism for high interest rates (up to 12% in some cases) and opaque dealings.
Major creditors, including the Paris Club, refuse to recognize Afreximbank as a traditional multilateral development bank (MDB), demanding loan restructurings. As the bank prepares to elect a new leader, it faces a critical choice: continue its high-risk, high-reward model or adopt more conservative MDB practices to restore credibility. The decision will shape its future role in African finance.
