Tag: credit rating

Credit rating has the potential to drive socioeconomic growth and development if well-harnessed.

The foregoing was the summary of the submissions made by a cross-section of participants who spoke at the 4th edition of the Annual International Credit Rating Webinar in Lagos, recently.

The high-profile event, the brainchild of DataPro, unarguably one of Nigeria’s leading credit rating agencies coincided with the firm’s 30th anniversary.

Setting the tone for the interface and discussion sessions, the Founder/Chief Executive at DataPro, Mr Abimbola Adeseyoju, recalled that in the past three decades has been rather eventful for the organisation.

The company in the last 30 years had contributed significantly to the growth and development of compliance, credit Rating, data protection and business information advisory, not only in Nigeria but all over the African continent, he stressed.

“We will continue to evolve both in innovative services and technological delivery in the coming space,” said Adeseyoju.

In his goodwill message Dr.  Emomotimi Agama, Director General at the Securities and Exchange Commission (SEC), while espousing the role of credit rating agencies in the economy, commended DataPro and its partners for their foresight and dedication in convening this important platform that brings together regulators, financial institutions, credit rating experts, investors, and development partners to examine the evolving role of credit rating agencies in today’s dynamic global economy.

According to him, this year’s theme, “The Role of Credit Rating Agency in a Dynamic Global Economy,” is relevant and profoundly reflective of our times. It underscores the need for trust, transparency, and sound governance as the bedrock of resilient financial systems.

As economies across the world contend with shifting global trends, geopolitical tensions, and technological transformation, the need for credible mechanisms that assess and manage risk has never been more pressing.

“Credit rating agencies, as you well know, play a critical role in filling this gap by providing investors and institutions with objective, data-driven insights that inform sound financial decisions. Credit ratings remain a cornerstone of the modern financial system. They serve as a compass for both investors and issuers, guiding investment flows, the pricing of financial instruments, and access to funding.

“In emerging markets such as Nigeria, credible and independent credit ratings are vital. They bridge information gaps, boost investor confidence, and guide capital toward productive sectors, thereby supporting national development and strengthening market participation. At the Securities and Exchange Commission, we recognise that well-functioning credit rating agencies are essential to the integrity of the capital market.”

The Commission, he assured, “remains steadfast in its commitment to maintaining a transparent and effective regulatory framework that promotes accountability, professionalism, and investor protection within the credit rating industry. Furthermore, we will continue to strengthen our oversight of credit rating agencies, encourage the adoption of international best practices, and support innovation that enhances the credibility of ratings, especially in a fast-evolving financial environment.

“Our broader vision for the Nigerian capital market is one of inclusivity, depth, and resilience, a market that mobilises long-term financing for infrastructure, enterprise, and innovation. In this vision, credit rating agencies serve as trusted partners in driving financial discipline and advancing transparency across market segments.

“By deepening partnerships and exchanging knowledge, we can build a stronger credit rating culture that not only reflects our local realities but also aligns with international standards. This will not only position Nigeria but indeed Africa as a credible destination for sustainable investment and capital formation.”

Also speaking, Mr. Bonaventure Okhaimo, Managing Director/ CEO, National Credit Guarantee Company Limited, acknowledged that, “The roles of credit rating agencies in facilitating cross-border investment, resource allocations, equip investors to make informed decisions among competing opportunities, improve organisations’ governance and support financial market stability cannot be over emphasised. At National Credit Guarantee Company (NCGC), your support to achieve our mandate of unlocking access to funding for MSMEs, local manufacturers, large enterprises and credit consumers through credible market data, analysis and rating reports is vital.”

In his keynote address, Prof. Mahesh K. Kotecha, President and Founder, Structured Credit International Corp, who spoke on ‘Leveraging a Credit Rating for Economic Growth in Developing Countries,’ said this comes at a critical time, when both advanced and emerging economies face profound fiscal and financial challenges.

“The Role of Credit Ratings Credit ratings are not a mere numbers game. They are independent and credible opinions of creditworthiness. They reduce information asymmetry, provide a common language between issuers and investors, and reinforce transparency and discipline in financial management. They assess whether the investor will get repaid its investment on time as scheduled.”

According to him, ratings matter for economic growth because stronger ratings attract long-term private investment and reduce borrowing costs, thus it frees up public resources for governments to invest in infrastructure, education, and healthcare.

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“In the early 2000s, very few African countries had sovereign ratings. That changed when UNDP and the U.S. State Department financed the first sovereign ratings by Standard & Poor’s and Fitch respectively for African sovereigns encouraged in part by a Roundtable on Capital Flows to Africa which I directed at the Council on Foreign Relations and which recommended African governments seek such ratings. Today over thirty African countries are rated by at least one of the Big Three rating agencies.

“These ratings have helped catalyse the African Eurobond market, which over two decades has seen issuances exceeding $300 billion. Ratings have become not only a passport to international markets but also a benchmark for investors on governance and reforms.

Yet challenges remain. Too few African countries have investment-grade ratings, and many remain vulnerable to commodity cycles, political instability, and fiscal stress. Some methodological challenges and data limitations add to the difficulties. For example, African economies tend to be commodity dependent and have large informal sectors which do not generate much government revenue, which increases fiscal deficits, a key sovereign credit metric.”

“Credit ratings are not perfect, but they are indispensable. They can open doors to capital, can discipline governments and companies, and can reinforce sound policy choices. If leveraged wisely, they can help transform the growth trajectories of developing countries, including Nigeria. But without governance and reform, even the mightiest sovereigns can falter. The challenge, and the opportunity, is before us. Nigeria has the chance not only to benefit from stronger ratings but also to lead in shaping Africa’s financial future. Let us ensure that ratings are not just scorecards, but bridges to resilience, transparency, and sustainable growth.”

Other speakers including Mrs Angela Jide Jones, the CEO of Sewa Capital, provided the perspective from our domestic market, just as Daouda Sembene, the CEO of AfriCatalyst from Dakar, Senegal, Idhyasagar Lingesan, the CEO of Care Credit Rating, Zwelibsnzi Maziya, the COO of Sovereign Africa Rating from South Africa, and Obed Mbuzi, Director of Premier Rating Services, shared their experiences working with one of the biggest rating agencies.

The highpoint of the occasion was the cutting of the anniversary cake and the presentation of Adeseyoju’s personal biography.

Credit agencies world over play crucial role in the global financial system by evaluating the creditworthiness of individuals, businesses and corporates or governments, Mr Oladele Adeoye has said.

Adeoye, the Chief Rating Officer at DataPro, one of the foremost credit rating agencies in Nigeria, spoke recently at a hybrid event aimed at sharpening the understanding of the media on the paramount role of credit rating agencies in the country.

The third in the series of such interface and discussion programme tagged, ‘Understanding Qualitative Factors in Rating Considerations’, helped to unlock opportunities in the credit rating ecosystem.

Justifying the need for the programme, Adeoye said it was meant to educate the media on qualitative factors to be considered in rating decisions, promote the value proposition of the credit rating industry, and instill a credit culture in Nigeria.

While attempting a prognosis of the cause of the nation’s parlous economy, he made a correlation between inflationary trend and borrowing.

According to him, last September, the federal government relied more on domestic borrowing, as it accounted for 51.6 percent of the total debt profile, with the former taking ₦69.2 trillion and state governments having ₦4.2 trillion as their debts.

The increase was due to the issuance of Federal Government bonds and a rise in promissory notes, showing the government’s dependence on domestic borrowings to meet financial needs.

He stated that the bond issuance in naira contributed to most of the spike, as the dollar-based bond was recently introduced to the domestic stock at ₦1.47 trillion.

Going down memory lane, Adeoye revealed that the concept of credit rating agencies emerged in the United States in the 1840s, with the Mercantile Agency, as the forerunner.

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Established in 1841 by Lewis Tappan, the agency collected and sold information about the creditworthiness of businesses.

Pressed further, he said, in l the late 19th century, other CRAs, such as Dun & Bradstreet (founded in 1849) and Moody’s (founded in 1909), began to emerge.

This during the early 20th century, CRAs expanded their services to include ratings for bonds and other securities. Moody’s introduced its bond rating system in 1914, followed by Standard & Poor’s (S&P) in 1926, he said.

“Fitch also introduced its bond rating and letter-grade scoring system in the 1920s. In the 1930s, the U.S. government began to regulate CRAs, requiring them to register with the Securities and Exchange Commission (SEC). The SEC also established guidelines for CRAs to ensure their independence and objectivity.”

Analysing the concept of credit rating, the DataPro chief explained the three main expectations of a credit rating agency, citing stable, timely and accurate predictions.

According to him, stable prediction maintains consistency in predictions to build trust and reliability.

Adeoye said timely predictions ensure predictions are made promptly to allow for necessary actions, while accurate predictions develop models that precisely identify potential defaults.

Noting that credit rating agencies play a significant role in promoting economic growth, employment, and efficient credit allocation, he listed some ways that the agencies achieve this.

He said these are achieved by facilitating access to capital, reducing funding costs, encouraging investment, supporting infrastructure development, and promoting economic growth.

On value proposition, Adeoye said credit rating outcomes are determined through a comprehensive evaluation process by its agencies.

He stressed factors that influence credit rating outcomes, such as qualitative factors like financial performance, debt profile, liquidity, and profitability.

Also, he mentioned factors such as management and governance, industry and market, regulatory environment, business reputation, and economic conditions.

While he gave the qualitative factors in assessing credit risk, Adeoye said it was also equally important to consider the qualitative factors that provide a deeper understanding of the borrower’s creditworthiness.

On economic and political factors, he hinged them on economic conditions, political risk, and environmental factors.

On the role of the media, he said the media has the unique advantage of assessing qualitative data and could, therefore, assist the larger credit economy through objective reporting.

The media, Adeoye emphasised, has the unique advantage of accessing the qualitative data and can therefore assist the larger credit economy through objective reporting.