This Week in ESG and Impact Investing

  In the backdrop of the IMF/World Bank Spring Meetings, the Brookings Africa Growth Initiative (AGI), AfriCatalyst and the UNDP’s Africa Bureau hosted a high level panel discussion about the impact of credit ratings on African development. Panelists included Ghana’s Minister of Finance Ofori-Atta, Senegal’s Minister of Economic Planning Oulimata Sarr and the President of the Eastern and Southern Africa Trade and Development Bank Admassu Tadesse. At the IMF/World Bank Meeting in 2017 , Economist and Creative Investment Research CEO William Michael Cunningham raised concerns about discrimination and misadjusted risk attitudes towards the continent. It is encouraging to see that this conversation is finally receiving the attention it deserves. The panelists agreed that there is a need for reform in credit rating agencies' relationship with African sovereign states. They also highlighted the severe consequences of downgrades in credit ratings on African countries, hindering much-...

On Monday, April 18th, Standard and Poors, a Nationally Recognized Statistical Rating Organization (NRSRO), or credit rating agency, cut its credit outlook for the US to negative. We believe this rating opinion unwarranted and inaccurate. To understand why, one must look at credit rating agencies in general, their competence (specifically, their performance prior to the recent financial crisis), and current AAA rated countries. Lets take that last item first. Here is the list of countries currently rated AAA by S&P: Australia Austria Canada Denmark Finland France Germany Guernsey Hong Kong Isle of Man Liechtenstein Netherlands New Zealand Singapore Sweden United Kingdom United States of America We find it difficult to believe that the Isle of Man and Liechtenstein, countries whose main export appears to be laundered money, will be better future credit risks than the United States of America. Let's next review what a credit rating agency is, what it does and how it makes money ...