AFC’s ‘A’ Credit Rating by S&P: A Transformer in Infrastructure Financing in Africa
African Finance Corporation (AFC) recently achieved a significant milestone by achieving a long-term ‘A’ credit rating from S&P Global. This upgrade is expected to reduce AFC’s borrowing costs and strengthen its ability to finance critical infrastructure projects across the continent.
Significance of the new rating
Samaira Zubair, president and CEO of AFC, said in an interview with Reuters that this is the first time S&P has rated the financial institution. The ‘A’ rating gives AFC a strong position within the global investment grade category, increasing its credibility among international investors and potentially providing access to more affordable capital.
The move is particularly timely as African financial institutions increasingly rely on market-based lending to offset declining concessional lending and reduced aid from Western countries.
The CEO perspective: Validations and opportunities
Mr. Zubair said this rating is a strong endorsement of AFC’s financial strength and operational structure. He stressed that investment grade status opens the door to improved market access and should gradually lower funding costs for AFC and its clients across Africa.
“This rating confirms our strength and should lead to more competitive financing options,” Zubair said. He further noted that lower borrowing costs will allow the AFC to scale up support to priority areas amid tightening global financial conditions affecting African economies.
Key factors behind the rating
S&P Global highlighted AFC’s solid asset quality and excellent liquidity coverage as key reasons for its rating. In addition to its long-term ‘A’ rating, AFC received an A-1 short-term credit rating and a positive outlook, indicating the possibility of future upgrades.
AFC has already received an A3 rating from Moody’s, an AAAspc rating from S&P Ratings (China), and an A+ rating from Japan Credit Rating Agency. This positive outlook reflects the expectation that AFC will grow its sovereign shareholder base over time. Currently, Nigerian entities, including the Central Bank of Nigeria (CBN) and financial institutions, own about 75% of AFC’s shares, highlighting Nigeria’s dominant influence.
In contrast, other African development banks, such as Afreximbank, have faced downgrades, with Fitch lowering their ratings to junk status after ending their relationship with the bank.
Why this upgrade matters for Africa
Improving credit ratings has reached a critical juncture as Africa’s development finance institutions grapple with rising global interest rates, increased credit risk and reduced concessional funding sources.
Investment grade status enhances AFC’s ability to raise capital internationally at low interest rates. Lower financing costs can be passed on as more affordable long-term financing for infrastructure, energy and industrial projects across the continent. This rating strengthens confidence in African-led financial institutions, which is essential at a time when external development financing is scarce.
For Nigeria, AFC’s largest shareholder, this upgrade indirectly strengthens the country’s position among more resilient and competitive pan-African financial institutions.
AFC’s role and future prospects
AFC is a multilateral development finance institution focused on infrastructure investments across Africa. The company will invest approximately $4 billion in various projects in 2025, and Zubair expects to maintain or exceed this level in 2026 with a strong project pipeline.
Priority investment areas include gold mining, critical minerals, renewable energy and fertilizer production, in line with Africa’s rich natural resources and industrial development needs.
One notable project is AFC’s financing of the Lobito Corridor, a U.S.-backed railway linking copper mines in Zambia and cobalt fields in the Democratic Republic of the Congo to the port of Lobito in Angola. The corridor is expected to stimulate mining and agricultural activities in the region.
AFC plans to continue issuing international bonds such as sukuk bonds, panda bonds and samurai bonds to finance its operations. Furthermore, as global investors seek higher returns in emerging markets, they are also exploring private credit financing opportunities.
Looking to the future: Strengthening Africa’s financial landscape
S&P’s rating upgrade not only confirms AFC’s financial soundness, but also signals increased investor confidence in African Development Financial Institutions. As the continent faces evolving economic challenges, improving AFC’s creditworthiness will help mobilize the capital needed to drive sustainable growth and infrastructure development.
With this new rating, AFC is well placed to support Africa’s ambitious development plans and promote economic resilience and integration across the region.
