Research

The next frontier in SME ratings

Small and medium-sized enterprises (SMEs) have been plagued with the perennial issue of access to funding. While there have been concerted efforts to ameliorate this ubiquitous issue, these efforts have had a tenuous effect when we examine the significant credit gap that exists in both developed and developing markets. The SME credit rating concept has proven to be effective at improving access to finance and proliferating business opportunities. However, the problem is that the concept is not widely available, and there is limited knowledge of its potential benefits; this book has been written to address this by increasing awareness of the concept. I introduce the public sector model, which has been quite effective at providing these services on a broad-scale basis. There has been much talk of a public sector credit rating model, but there is almost no awareness about the public sector SME credit rating model outside of Europe. My firm, Credit Rating Analytics, is currently assisting a sovereign state in creating the first public sector grading agency in emerging markets, which will be the world’s largest upon completion (public or private). I include some of the insights gained from that project and provide a stepwise breakdown of how other countries can create similar public sector grading/rating agencies.

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The Credit Rating Agency Market in Africa: Landscape and Future Research Directions

We partnered up with senior faculty members from Harvard Business School to explore the role of credit ratings in global markets and highlight potential opportunities for research on the African credit rating agency market. We trace the evolution of credit ratings and conduct a comprehensive literature review of existing studies globally that explore determinants, properties, and capital market impacts of credit ratings. We then evaluate the African credit rating agency landscape, showcasing the contribution of local credit rating agencies. We end by suggesting research areas that could leverage the characteristics of the African context. We also highlight recent calls for public sector credit rating agencies as an alternative approach to solving persistent rating coverage gaps. Overall, our paper aims to provide a nuanced understanding of the credit rating landscape in Africa, offering insights into its challenges, opportunities, and future research directions.

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The Economic Benefits of a Public Sector Nano, Micro, Small and Medium Enterprise (nNMSME) Grading Agency: Evidence from Nigeria

This is a summary of the work we are busy with in Nigeria. The short op-ed piece outlines our working paper on creating public sector grading systems in Emerging Markets. Using research and insights from ongoing work with the Nigerian government, the first country in Africa to attempt to establish a public sector grading entity, we showcase the potential economic benefits of the public sector gradings in Nigeria as a proxy to how the evidence of the benefits could impact other countries within emerging markets. Given the challenges faced by the private sector rating services for small and medium enterprises around the world, we propose a public sector model as a solution to support the economic activity and document findings aimed at providing actionable insights for emerging markets considering the adoption of a public sector grading system.
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Monthly economic report: South Africa, 6 June 2023

Credit rating analytics is not a credit rating agency but is one of the few independent consulting firms that specializes in the field of credit rating agencies and related analytical research.

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