Africa ratings review

In a recent interview on CNBC Africa, Matthew Pirnie, Senior Research Analyst at Nedbank Corporate and Investment Banking, provided insights into the credit ratings review in Africa. The conversation highlighted Senegal as a country facing significant challenges, with the 'sword of Damocles' hanging over its fiscal position. President Fay's commissioning of an audit revealed a surge in debt levels, raising concerns about the country's economic stability. Pirnie expressed his expectation of negative rating actions on Senegal, citing both fiscal and institutional issues as key drivers. He also noted the potential risk of a double-notch downgrade, although he assessed the probability at around 20%.Moving the focus to Kenya, Pirnie acknowledged the country's relatively positive outlook, attributing it to better information transparency and fiscal management. He expressed confidence in Kenya's ability to achieve fiscal consolidation and manage its debt effectively. Shifting gears to South Africa, Pirnie painted a more optimistic picture, citing recent progress in addressing power challenges and the formation of a government of national unity. He forecasted positive outlooks from rating agencies in the near future, leading to a potential upgrade by early 2026. Factors contributing to South Africa's favorable assessment included GDP growth, fiscal stability, and institutional improvements.Pirnie emphasized that South Africa's journey to an investment-grade rating would be a long-term endeavor, requiring sustained economic growth, debt reduction, and political stability. He cautioned that achieving an investment-grade status could take several years, depending on policy certainty and leadership transitions within the country. Despite the challenges ahead, Pirnie remained optimistic about South Africa's prospects, underlining the importance of continued progress in key areas to attract investors and improve the country's credit profile.