From Grievance to Design

By Dean N Onyambu

For years, we have said, “Africa pays too much to borrow because the rating agencies are biased.”

That anger is understandable. It is also incomplete.

In sovereign markets, default is the crash. The spread is the cost of insurance. Investors are not only looking at who has crashed before. They are looking at how close you drive to the guardrail every time the road bends. That is a question about institutions, buffers, and how volatile your income and policy space really are.

In a new piece, I build on Mutisunge Zulu’s excellent intervention on Africa’s risk premium. I unpack what the models behind spreads actually do, why two countries with the same rating can trade at very different levels, and why a simple comparison of default counts between Africa and Europe will always miss the real story.

The uncomfortable part is this. Once you write the problem down properly, the math often agrees with the direction of the premium. The hopeful part is that nothing in that machinery is sacred. We can build our own engines, with our own data and our own capital, and then argue over the parameters instead of shouting at the labels.

In the article, I call this a Genesis Mission for African risk. It is a practical project: fund African quants to build open risk engines, wire them into real decisions at ministries and central banks, and back them with African pension and sovereign capital that actually holds the paper.

I would like to hear from people who work inside markets, ratings, and policy.

If we are serious about changing the price of African risk, what do we need most in the next decade: better models, deeper domestic capital, or stronger political will to live with what the numbers will show?

Full article below.

Arthur Mulwa