Africa will launch its first continental credit rating agency in Mauritius on October 6, marking a significant step in the continent's long-running effort to reshape how investors assess African sovereigns and companies and potentially reduce the high borrowing costs many governments face.

The African Credit Rating Agency (AfCRA) will operate as an independent, private-sector-led institution providing sovereign and corporate credit ratings designed to reflect African market realities while operating on a commercial basis.

Speaking to CNBC Africa, Misheck Mutize, lead expert at the African Peer Review Mechanism (APRM), said preparations had advanced faster than expected following discussions at this week's African Union Specialised Technical Committee meeting.

"It means a new dimension has come," Mutize said. "We are seeing more confidence in Africa because the investors backing this initiative are from the private sector."

He said the agency would have no government shareholding, a structure intended to strengthen its independence and credibility among global investors.

The October launch represents the most concrete milestone yet for a project African leaders have pursued since 2017 to establish a home-grown alternative in a global credit rating industry dominated by Moody's, S&P Global and Fitch Ratings.

For years, African governments and regional institutions have argued that international rating agencies often overstate the continent's risks, resulting in higher borrowing costs and limiting access to international capital markets. Moody's and S&P have consistently rejected accusations of bias, maintaining that their methodologies are applied consistently across countries.

A 2023 study by the United Nations Development Programme estimated that subjective elements in sovereign credit ratings may have cost African countries as much as $74.5 billion in additional borrowing costs and missed financing opportunities, highlighting the financial stakes surrounding credit assessments.

Unlike international agencies, which primarily focus on sovereigns and large corporate issuers, AfCRA also aims to expand coverage across African companies, municipalities and local-currency debt markets, segments that remain largely unrated across much of the continent.

The launch also comes as global rating firms deepen their own investments in African expertise. Earlier this week, S&P Global agreed to acquire a majority stake in Agusto & Co., one of Africa's leading credit rating agencies with operations in Nigeria, Kenya, Rwanda and Ghana. Moody's has also expanded its African footprint in recent years through acquisitions including GCR Ratings, West Africa Rating Agency (WARA) and Egypt's Middle East Ratings and Investors Service (MERIS).

Mutize said those developments reinforce the argument African institutions have made for years that understanding the continent's economies requires stronger local analytical capacity.

"We seem to be vindicated that we were raising legitimate concerns," he said, adding that African institutions have backed their criticism of sovereign ratings with empirical research.

Rather than seeking more favourable ratings, AfCRA aims to improve the quality and contextual relevance of credit assessments, he said.

"The objective is not to inflate ratings," Mutize said. "It is to ensure ratings are informed by a deeper understanding of domestic political, economic and institutional realities."

Still, the agency's success will depend less on its launch than on whether investors, regulators and debt issuers recognise its ratings as credible alongside those of the world's established agencies. That challenge may prove decisive. Sovereign credit ratings influence governments' access to international capital markets, Eurobond pricing and investor appetite for African debt.

If AfCRA succeeds in gaining investor confidence, it could become a key pillar of Africa's financial architecture by providing an additional source of independent credit analysis while helping deepen domestic debt and capital markets.