The Absa Bank of Kenya has released the Africa Financial Markets Index for the year 2020 with Kenya’s financial market attractiveness dropping to the 7th positions, 4 places down from 2019, and 7 points down from 2019.
This year’s AFMI is anchored on six pillars that include; Market depth, Access to foreign exchange, market transparency, tax, and regulatory environment, Capacity of local investors, macroeconomic opportunity, Enforceability of financial contracts, collateral positions, and insolvency frameworks.
According to the Index, Kenya ranked 5th on the Market Depth pillar. The country also ranked 10th on the Access to Foreign Exchange pillar, placed 9th in Market Transparency, Tax, and Regulatory Environment index. The country came in 9th on the Capacity of Local Investors pillar.
Kenya’s financial market is also ranked 11th in Macroeconomic opportunity pillar and 6th position on Standard financial markets master agreements.
South Africa and Mauritius retain the top spots in the index, scoring 89 and 79, respectively. Nigeria, Botswana, and Namibia round off the top five. Namibia loses points from its failure to align with international contractual standards, while Nigeria’s lack of a unified exchange rate system pulls down its score.
“The Index evaluates financial market development in 23 Countries and highlights economies with the most supportive environment for effective markets,” said Absa Kenya in a statement.
“This report demonstrates to senior stakeholders and influencers across the continent and the world, that Absa maintains its commitment to the African continent and that we’re still open for business.”
Namibia leads in Pillar 4- Capacity of Local Investors. Its pension funds have shown rapid growth in recent years. Namibia now has the highest level of pension assets per capita in the index.
On the other hand, Eswatini, a new addition to the index, has the largest pension funds relative to the size of its local market, which shows the potential available for local investors to propel market development.
Ghana rises the most in Pillar 2- Access to foreign exchange- with its foreign exchange liquidity increasing, as measured by interbank foreign exchange turnover.
The 2020 AFMI report comes at a time countries are trying to navigate through the Covid-19 storm. Most economies across Africa, including Kenya, have taken the hit from Covid-19 with the Central Bank of Kenya saying that the economy is to slow down this year.