A recent survey conducted by Absa, known as the Absa Africa Financial Markets Index 2023, has highlighted Uganda’s noteworthy performance in the realm of financial markets within the African continent. The survey assessed financial market performance in a total of 28 African countries, revealing that Uganda secured the fourth position with a score of 63.
This positioning demonstrates Uganda’s consistent excellence in maintaining the stability of its financial markets. Notably, the country retained its status among the top five financial markets in Africa.
The index’s assessment also showcased that, within the year leading up to June, Uganda achieved a notable milestone. Its local currency government bonds were added to the FTSE Frontier Emerging Markets Government Bond Index. This development has significantly increased the country’s visibility in the global financial market.
In the ranking of financial markets, South Africa emerged as the leader among the 28 countries surveyed, securing the top spot with a score of 88. It was followed by Mauritius with a score of 77, Nigeria at 67, and Uganda, as mentioned earlier, at 63. Kenya rounded off the top five with a score of 59.
Uganda stands out as the leader in East Africa, with Tanzania achieving a score of 55, while Rwanda secured a score of 44.
Despite maintaining its ranking, Uganda experienced a slight decline in its overall score, which fell from 64 in the previous survey. This decline was attributed to reductions in foreign exchange reserves and liquidity.
The Absa Africa Financial Markets Index, now in its seventh year, assesses financial development based on market accessibility, openness, and transparency, aiming to identify ways in which economies can diminish barriers to investment. Investors use this index as a benchmark to evaluate Africa’s financial market infrastructure.
With support from the United Nations Economic Commission for Africa, the index has expanded its coverage to 28 countries, including recent additions Cape Verde and Tunisia. It measures market depth, considering the size and liquidity of equity and bond markets, access to foreign reserves, market transparency concerning tax and regulatory environments, and other factors such as the capacity of local investors, the macroeconomic environment, and transparency and legal standards.
Absa, the organization behind the survey, pointed out that a challenging global economic environment has had a substantial impact on financial markets in Africa. Survey respondents highlighted concerns such as inflation, rising interest rates in advanced economies, and geopolitical tensions as challenges affecting domestic markets.
Absa’s CEO, Mr. Arrie Rautenbach, emphasized that the challenging global environment has led to several countries witnessing declines in their domestic capital markets, primarily due to concerns related to debt sustainability.
