
The African Union’s African Peer Review Mechanism (APRM) has criticized Moody’s Investor Service for its latest revision of Kenya’s credit outlook from ‘negative’ to ‘positive’, arguing that the move is an admission that the July 2024 downgrade was premature and incorrect.
In a statement released on Monday, APRM questioned Moody’s rating methodology, particularly the agency’s decision to skip a ‘stable’ outlook and jump directly from ‘negative’ to ‘positive’. The African Union body described this as an attempt to reverse a miscalculated rating action from July 2024.
Moody’s Reverses July Downgrade
On Friday, Moody’s revised Kenya’s outlook to ‘positive’ from ‘negative’, citing:
✅ Easing liquidity risks
✅ Improved debt affordability over time
However, Moody’s also affirmed Kenya’s local and foreign-currency long-term issuer ratings at ‘Caa1’, reflecting ongoing credit risks due to:
❌ Weak debt affordability
❌ High gross financing needs relative to available funding options
APRM Calls Moody’s July 2024 Downgrade “Speculative”
The APRM criticized Moody’s July 2024 downgrade, arguing that it was based on political protests against the proposed Finance Bill rather than economic fundamentals. The agency noted that at the time of the rating downgrade:
🔹 The final budget had not been released
🔹 The Finance Bill had not been passed
🔹 The new cabinet had not been formed
Similar Pattern in Nigeria’s Credit Ratings
APRM also pointed to Moody’s handling of Nigeria’s credit rating in 2023 as another example of premature assessments. The ratings agency downgraded Nigeria from ‘B3’ to ‘Caa1’, predicting a worsening fiscal and debt position under the new administration. However, by December 2023, Moody’s reversed its outlook from ‘stable’ to ‘positive’, citing improved economic policies.
The African Union’s review mechanism has urged credit rating agencies to adopt more transparent and data-driven assessments, particularly when analyzing African economies.