Uganda among top 10 countries in Africa with easy access to foreign currency

Among the six pillars, the Absa report indicates that Uganda performed better than 22 out of 29 countries in terms of access to credit. Photo / File
What you need to know:
- Under the access to foreign exchange pillar, Uganda scored 67 out of 100, coming behind South Africa, Madagascar, Mauritius, Kenya, Botswana and Egypt
Uganda is among the top 10 countries with easy access to foreign exchange, according to a report by Absa.
In details contained in the Absa Africa Financial Markets Index 2024, Uganda is seventh under access to foreign exchange, which is part of the pillars used to measure accessibility, transparency, and openness of financial markets across 29 African countries.
The report shows that Uganda scored 67 out of 100 in ease of access to foreign exchange, coming behind South Africa (87), Madagascar (79), Mauritius (76), Kenya (70), Botswana (68) and Egypt (67).
In East Africa, only Kenya scored a better mark than Uganda, while Tanzania, in 10th position, scored 60, followed by Rwanda (58), and DR Congo (48), respectively. This, the report noted, places Uganda in a better position in terms of attracting investors, which remains an impediment to foreign direct investment in many African countries.
Speaking at the launch of the report in Kampala, Bank of Uganda deputy governor Michael Atingi-Ego, said Uganda had benefited from reforms in the foreign exchange market that emphasize transparency, price efficiency, and ethical trading practices.
However, he noted, the progress so far, should not create complacency, but should instead inspire more action to unlock the vast potential of Uganda’s financial markets, channel savings into productive investments, and build systems that are transformative.
The Absa report, which measured six pillars, including market depth, access to foreign exchange, market transparency, tax and regulatory environment, pension fund development, macroeconomic environment and transparency, and legal standards and enforceability, gauged the performance of financial markets across 29 African countries.
Uganda was ranked among the top 10 in four of the six pillars but performed poorly in pension fund development and market transparency, tax, and regulatory environment pillars.
The report indicates that under the macroeconomic environment and transparency and market depth pillars, Uganda scored 87 and 46, to rank second and 10th, respectively, while the country scored 85 to rank fifth under legal standards and enforceability.
However, the report noted that Uganda remained weak in pension fund development, scoring 15 out of 100, while under market transparency, tax, and regulatory environment, the country scored 76 to rank 11th.
The performance, therefore, placed Uganda among the top five countries with the most accessible, transparent, and open financial markets across 29 African countries.
The report indicates that Uganda scored 63, an improvement from last year’s 62, which resulted in an overall fourth position in terms of accessibility, transparency, and openness of financial markets.
Only South Africa, which scored 87, Mauritius (77), and Nigeria (64), performed better than Uganda out of 29 measured countries.
More is needed
Ms Catherine Kijjagulwe, the Absa acting head of markets, said that whereas Uganda had performed better than many countries, there was still room more for improvement, especially in pension fund development.
For instance, she said Uganda’s pension fund assets per capita, which stand at $129m, were well below Absa Africa Financial Markets Index’s average of $820m, noting that there was need to attract more retail investors in the market.
Ms Amanda Kabagambe, a partner and head of East Africa for TLG Capital, said Uganda needed to ensure that it puts in place policies that can attract more investors and support market transparency, which remains a drag-on in the country’s performance.
“There is a need for an increase in liquidity, market depth, tax transparency, and tax stability in for the country to keep developing its financial market,” she said.