He said the downgrades exacerbated the challenges in African countries including Ghana.
Fitch Ratings, for instance, in April this year downgraded Ghana's Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) to ‘RD' from ‘CCC'.
President Akufo-Addo said at the 30th Annual Meeting of the Afreximbank on Sunday, June 18 that “the AU champion for African financial institutions and leader of a country that recently had to deal with one of the most difficult periods in his post-independent history, difficulties that were exacerbated by the reckless behaviour of rating agencies that engaged in pro-cyclical downgrades that shut Ghana out of the capital market and turned a liquidity crisis into a solvency crisis.”
He further indicated that relying on borrowing for development in African countries comes with challenges.
He said it is risky and costly.
To that end, he is calling for the strengthening of African financial institutions and their ownership in order to provide financial support to African countries at a low cost.
He said “The reality is that unless we have strong financial institutions we are not going to develop. As we have learned over the past decades, relying on foreign capital is both risky and costly.
“It has resulted in huge financial leakages through the high cost of defaulting in borrowing and interest rate payments and undermines the growth of our financial institutions, domestic resource mobilization, and private sector development through the cost of funds.
“The ownership of our financial institutions should be strengthened over time to enhance continuous development and relevance.
“Two interventions are important to strengthen the developmental impact of the financial wherewithal of our development financial institutions. They are capital and effective coordination with the African Union.
“Regarding the first set of interventions capital, I want to reiterate that despite consistent efforts made by many African governments including during extremely difficult macroeconomic and global operating environments, our development financial institutions remain highly undercapitalized.”