Ratings of the soundness of governance

Ratings form the pinnacle of opinions issued by Ratings Afrika. They are only issued when a request for rating is received from the ratee, via standard mandate. This sets out the relationships, underscores independence, requires access to information, and promises confidentiality.

Outputs from a rating assignment include:

a rating symbol that indicates the soundness of governance,
a report summarising the agency's views,
verbal feedback and a board presentation,
a press release on publication.

The rating process is interactive.

At the time of the initial rating, the ratee has the option of either keeping the result confidential or making it known publicly.

A brief outline of the process is available by download from here.

The list of the symbols and their definitions is available by download from here.

Scorings of the quality of governance

Scorings provide a gauge-by-section of the normal second-stage analytical process followed by Ratings Afrika. They stop far short of an overall fourth-stage opinion such as a rating.

Scores are given as a mark out of a possible maximum of 100 per section. They are accompanied by expanded commentary.

There is not necessarily a direct relationship between scoring results and a rating.

Currently the only set of scorings in the public or client domain, is the MFSI. It is an index of municipal financial sustainability.

Assessments of governance

There is a considerable difference between the reliability of an assessment opinion and a scoring or a rating. An assessment is not based on a mandated (and thus interactive) relationship between the agency and the entity concerned. The agency is basing its views on information that may not be verifiable and may be incomplete.

There thus is a warning to the user that the view is qualified, and should be used with circumspection.

An example of an assessment is provided for downloading from here.

Board Appraisals

Ratings Afrika offers independent appraisals of the effectiveness of a board of directors, its committees and individual members of the board. These appraisals are available either as a stand-alone service or as an add-on to a rating of soundness. A modern form of peer review is included. In addition, the secretariat is assessed for its effectiveness. As is the case with our other work, the board appraisals are interactive and are not questionnaire-based.

Our appraisal teams are smaller than our ratings teams, and normally comprise three members. This is to ensure continuity over all the meetings with directors. Standard practice is to have at least two team members present at every individual meeting of two hours’ duration.

The Ratings Afrika independent board appraisals are different from similar offerings, inter alia for the following reasons:

Highly experienced, practical team members
Reliance on interactive discussion
Measurement on a “world best practice” basis
Assignments are performed with total frankness in mind
Working to an 18-point scale of effectiveness
Report-back within 30 days
Huge trust engendered between the parties
Understanding of cultural diversity and differing business backgrounds

Our independent board appraisals are offered in Anglophone Afrika and western Europe, excluding France, Portugal and Spain. Our sister firm Ratings Europa is active in the European arena, utilising the same methods and types of experience.

Our board effectiveness scale is available for download from here.

Other opinions

Ratings Afrika issues other opinions and has bespoke services available in the area of investigation, due diligence analysis, non-governance ratings advisory work, and comment.