A panel of Africa experts on Tuesday urged the Group of 20 major economies to step up oversight of credit rating agencies, which they accused of using flawed and opaque methodologies that increase borrowing costs for African governments.

The panel, established under South Africa's G20 presidency, said in a report to the group that rating agencies exhibit "perception biases", often assessing African risk as higher than other regions with comparable economic fundamentals.

Ahead of a G20 summit this weekend, the panel called on the group to impose stricter oversight of rating agencies, mandating greater disclosure of the data and models underpinning their decisions.

It also recommended updating rating frameworks to better capture the diversity of African economies such as their growth potential and natural resources, and avoiding knee-jerk rating cuts that can exacerbate financial strains.

S&P Global Ratings, Moody’s and Fitch have rejected accusations of regional bias, saying their sovereign ratings are based on globally applied, publicly available criteria and that the same methodologies are used for all countries.

The African Union, meanwhile, is working on an African Credit Rating Agency, which it plans to launch in the second half of 2025 to offer an Africa-based assessment of credit risk.

The panel said that the perception bias inherent in ratings methodologies inflated the cost of raising capital for African governments and companies in global financial markets.

"The rating agencies' methodologies remain flawed," its report said, adding that the agencies made it difficult to scrutinise or challenge their conclusions.

The panel was chaired by South Africa's former Finance Minister Trevor Manuel and its members include Nobel laureate economist Esther Duflo and former African Development Bank President Donald Kaberuka.