Survey puts Uganda among top financial markets in Africa
The Absa survey indicates that Uganda's financial markets are performing better than their peers in the East African region. Photo / File
What you need to know:
- The Absa survey indicates that out of the 28 countries in Africa, Uganda was fourth in terms of good financial markets performance
Uganda’s financial markets remain among the total five in Africa, according to the Absa Africa Financial Markets Index 2023.
The index, which measured performance of financial markets in 28 countries, indicates that Uganda was fourth, among the surveyed countries in Africa with a score of 63.
The country, therefore, maintained its position, signifying good progress in ensuring financial markets stability.
The index highlights that during the year to June Uganda has seen its local currency government bonds added to the FTSE Frontier Emerging Markets Government Bond Index thus increasing its visibility in the global market.
South Africa has the best financial markets, among the 28 surveyed countries with a score of 88, followed by Mauritius (77), Nigeria (67) and Uganda (63). Kenya rounds off the top five at 59.
Uganda leads East Africa, with Tanzania scoring 55, while Rwanda scored 44.
However, even though Uganda maintained its ranking, the country’s overall score declined from 64 registered in the last survey due to a fall in foreign exchange reserves and liquidity.
Now in its seventh year, the index evaluates financial development based on market accessibility, openness and transparency to show how economies can reduce barriers to investment.
The index has become a benchmark on which investors gauge Africa’s financial market infrastructure.
With support from the United Nation’s Economic Commission for Africa, the index has grown its coverage to 28 countries from 26 last year with the addition of Cape Verde and Tunisia.
It is measured on market depth, which evaluates the size and liquidity of equity and bond markets, access to foreign reserves and market transparency in terms of tax and regulatory environment. Other measures include capacity of local investors, macroeconomic environment and transparency and legal standards and enforceability.
Absa noted that a challenging global economic environment has hit financial markets in Africa with various survey respondents identifying inflation, rising interest rates in advanced economies and geopolitical tensions as challenges to domestic markets.
Concerns
According to Mr Arrie Rautenbach, the Absa chief executive officer, a challenging global environment has made many countries experience decline in domestic capital markets over rising concerns of debt sustainability.
