AU body disagrees with Moody's positive rating on Kenya, terms it irresponsible

Established in 2003, the APRM is a specialised agency of the African Union that is an arrangement among African states to review governance across the member states. 

On Friday, Moody's revised Kenya's credit rating from negative to positive, citing a potential ease in liquidity risks and improving debt affordability. 

APRM, however, argued that the rating was premature as Moody's downgrade rating in July 2024 was speculative as it had not accounted for the spending allocations, the final budget, the finance bill, the new cabinet and midterm review data on the Appropriation Bill. 

According to the AU agency, Moody's downgraded Kenya's rating downwards due to the anti-government protests that occurred from June to August 2024. 

Further, APRM noted that Moody's has erred in its past reviews by providing premature analysis. 

"In January 2023 Moody's also erred by downgrading Nigeria from B3 to Caa1 citing that the government's fiscal and debt position was expected to deteriorate further under the new administration," the statement read in part. 

"The Nigerian government challenged the inaccuracy of that rating action on the basis that the rating agency lacked an understanding of the country's domestic environment. Moody's reversed Nigeria's outlook from stable to positive in December 2023 citing positive economic policy developments in the country."

APRM noted that Moody's had acted prematurely and countered by reversing Nigeria's outlook. 

The AU agency noted that such actions often lead to losses, Eurobond sell-offs, and potentially harms Africa’s economy.

They advised Moody's to be patient for the complete term review data before taking rating actions rather than taking a speculative approach. 

Moody's positive rating on Kenya had elicited debate across all quarters with many terming that Kenya's new rating still put the country at risk on credit provision. 

President William Ruto, however, took a different approach and expressed confidence that the country was moving in a positive direction. 

“We are doing well," the president said while posting the Moody's report.