Absa Africa, trading in Kenya as Barclays Bank of Kenya has released this year’s Financial Markets Index featuring 20 African countries including Kenya.
The Financial Markets Index report by Absa Group evaluates financial market developments, as well as highlighting economies with the clearest growth aspects.
“The aim of the Absa Africa Financial Markets Index is to show not just the present positions but also how economies can improve market frameworks to meet yardsticks for investor access and sustainable growth,” said the report.
The 20 African countries were assessed based on 6 major economic pillars:
- Market Debt
- Access to foreign exchange
- Tax and regulatory environment
- Market transparency
- Capacity of local investors
- Macroeconomic opportunity
- Enforceability of financial contracts
In this year’s report, Kenya retained her position as the third most advanced financial market in the African continent, coming after South Africa and Mauritius.
For a third year running, South Africa has once again been named the most advanced financial market in Africa followed by Mauritius which has replaced Botswana in the second position.
Nigeria, Africa’s largest economy, is ranked sixth as shown in the list:
- South Africa
- Mauritius
- Kenya
- Namibia
- Botswana
- Nigeria
- Tanzania
- Zambia
- Rwanda
- Uganda
- Egypt
- Morocco
- Ghana
- Seychelles
- Mozambique
- Ivory Coast
- Angola
- Senegal
- Cameroon
- Ethiopia
In the East African region, Kenya leads her peers with a score of 65, followed by Tanzania with a score of 55, Rwanda with a score of 53, Uganda with a score of 52 and Ethiopia with a score of 27.
This is how the East African giants ranked:
- Kenya
- Tanzania
- Rwanda
- Uganda
- Ethiopia
Of the six pillars, Kenya registers the highest ranking on the legality and enforceability of standard financial markets master agreements space with 96 points, coming a close second to Mauritius with a score of 98 points.
Kenya’s adoption of the Global Master Securities Lending Agreement (GMSLA), which provides a contractual framework for securities lending arrangements, has boosted her standing this year.
Among the top ten countries in legality and enforceability of standard financial markets master agreements are:
- Mauritius
- Kenya
- South Africa
- Namibia
- Tanzania
- Nigeria
- Zambia
- Botswana
- Rwanda
- Ghana
In addition, Kenya scores well for its insolvency law that encourages rehabilitation through the administration of companies facing financial difficulty.
Kenya lags her East African peers – Uganda and Rwanda- in Pillar 2 which examines access to foreign exchange and other factors that impact markets’ accessibility to international investors. While Kenya led in this pillar last year, it has dropped to fifth position after the International Monetary Fund reclassified its exchange rate regime to ‘other managed arrangement’ from ‘floating’.
This is how the countries ranked in the access to foreign exchange:
- South Africa
- Egypt
- Uganda
- Rwanda
- Kenya
- Botswana
- Seychelles
- Zambia
- Tanzania
- Mauritius
The report further notes that the continued implementation of the interest rate caps, introduced in 2016, has hampered credit creation, weakening companies’ financial bottom line and hindering their expansion plans, negatively impacting their capital issuance.