The Neo-Colonial Logic of Global Credit Ratings

The influence of credit rating giants, Moody’s Investor Service, Standard & Poor’s and Fitch, in Africa is deeply rooted in colonial legacies. Their systemic biases and harmful economic implications have made African-led reforms to reclaim financial sovereignty necessary.

Written by Nosike Nwajide

Mar 2, 2025

Photo Illustration by Ezinne Osueke / THE REPUBLIC.

In early 2023, Nigeria found itself in the eye of an economic storm as Moody’s—one of the world’s leading credit rating agencies—downgraded Nigeria’s credit rating from B3 to CAA1. This decision sent shockwaves through the financial markets, triggering a cascade of consequences that would reverberate across the nation. As the news broke, investors pulled back, and the value of Nigerian government bonds plummeted, leading to an immediate spike in borrowing costs. The dollar-denominated 2051 Eurobond, for instance, experienced a decrease of more than 2.8 cents, falling to 68.758 cents on the dollar. This decline in bond prices resulted in an increased premium, or ‘spread’, that investors demanded to hold Nigerian debt over US Treasuries, which widened by 46 basis points to 777 basis points. For a country already grappling with high inflation, inadequate infrastructure and a growing debt burden, this downgrade was more than just a number; it was a stark reminder of how external assessments could dictate the economic fate of nations.

As many African countries strive to recover and rebuild in the aftermath of the 2020 COVID-19 pandemic, access to affordable financing has become critical. With international investors increasingly relying on credit ratings to gauge risk, a single downgrade can severely limit a country’s ability to attract investment and secure funding for essential development projects. In Nigeria’s case, the downgrade not only raised borrowing costs but also threatened ongoing efforts to invest in infrastructure and social programmes vital for economic recovery. The strain from higher debt servicing costs would necessitate the reallocation of funds from planned infrastructure and social initiatives to meet debt obligations, thereby hindering economic recovery efforts.

Nigeria’s experience echoes the struggles of other African nations like Ghana and Egypt, where recent downgrades (in February 2022 and October 2023, respectively) have exacerbated economic challenges. The broader context of this issue is the systemic bias inherent in the global financial system. African nations, often burdened by historical legacies of colonialism and neo-colonialism, are frequently subjected to stringent rating criteria that may not fully account for their unique economic realities, which could lead to inaccurate assessments and entrench a cycle of dependency.

Across Africa, there are growing calls for reform within the credit rating industry. Stakeholders are advocating for changes that would lead to more accurate and equitable assessments reflective of local contexts. As economist, Dambisa Moyo, argued in her book Dead Aid, the current model of foreign aid has not only failed to alleviate poverty but has actively hindered Africa’s progress, perpetuating a cycle of dependency and corruption thus highlighting the need for structural changes in how financial assistance is provided.

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About the Author

Nosike Nwajide

is a research professional based in Lagos.

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The Neo-Colonial Logic of Global Credit Ratings