Kenya’s financial market has been rated the most advanced in the East African region and 5th with a score of 59 per cent in the continent ahead of economic giants like Nigeria (53 percent,) Ghana (49 per cent) and Egypt (39 per cent).
South Africa with a score of 92 per cent was ranked first.
Kenya scored the highest ranking in East Africa attributed to its strong contract enforcement policies, market depth as well as the capacity of local investors, ahead of Uganda, Tanzania, Rwanda and Ethiopia.
The Africa Financial Markets Index (AFMI) gives focus on 17 African countries by Barclays Africa Group advocates for the expansion and deepening of financial markets across the continent.
The Index measures six pillars: depth and breadth per instrument or product that can be traded, access to foreign exchange, market transparency, tax and regulations, macro economic opportunity, legality and enforceability.
The index measured and tracked 40 indicators across the six pillars.
“The Index provides countries with valuable insights and tools to improve the state of their financial markets,” said Jeremy Awori, Managing Director, Barclays Bank of Kenya. “By broadening and deepening their understanding of the requirements of local and international investors, Africa’s leaders can develop robust markets – a prime condition for sustainable, inclusive growth,” he added.
In the index, Kenya outpaced its East African peers in the market depth pillar, which focussed on areas such as the range of financial products, currencies and hedging options available and capacity of local investors’ parameters.
It also emerged top in East Africa and 3rd on the continent with a score of 81 per cent behind South Africa (100 per cent) and Mauritius (93 per cent).
The survey, however, challenged Kenya to improve on areas such as low historical growth in export market share, low GDP per capita and relatively small market capitalization.
“Improving the regulatory and policy environment is a prerequisite for attracting foreign capital,” said Mr. Asante. “The inaugural Barclays Africa Group Financial Markets Index is an important barometer measuring the progress and potential of Africa’s financial markets.”
“African financial markets have traditionally suffered from a lack of depth relative to other regions,” said George Asante, the Barclays Managing Director and Head of Markets (Africa ex. SA). “This”, he added, “Has been a key factor holding back the ability of firms and investors within and beyond the continent to exploit expansion opportunities.”
The Barclays Africa Group Financial Markets Index was produced by the Official Monetary and Financial Institutions Forum (OMFIF) in association with Barclays Africa Group Ltd in the course of last year.