KAMPALA – Uganda is ranking fourth with a score of 66 out of 26 countries surveyed in the Africa Financial Markets Index 2022.
Absa Group survey, released on Tuesday in Kampala said Uganda was up from 6th position in comparison to the survey done in 2021.
The survey, according to the bank, evaluates financial market development in 26 countries and highlights economies with the most supportive environment for effective markets.
South Africa and Nigeria maintain their lead in the index.
In the East Africa region, Uganda ranked number one followed by Kenya, Tanzania came third followed by Rwanda and DR Congo.
The scores in the index are determined by the performance of each country across six key pillars: market depth; access to foreign exchange; market transparency, tax, and regulatory environment; capacity of local investors; macroeconomic environment and transparency; and legal standards and enforceability.
Michael Atingi-Ego, deputy governor of the country’s central bank, Bank of Uganda, while giving his keynote address at the launch of the survey said despite the effects of the pandemic, Uganda managed to perform well.
Atingi-Ego said the ranking shows that there is a need to sustain good policies and strategies that will power the financial market to drive economic growth and socio-economic transformation.
“Targeting the top of the index is symbolic of our determination to nudge, push and incentivize the fuller development of our financial markets. Effective and efficient financial markets in an open, transparent, and progressive economic environment will sustain and broaden our capacity to attract global capital, promote the effective use of domestic resources, increase resilience to economic shocks, and stimulate the economic recovery that remains fragile partly due to subdued investment,” he said.
Mr. David Wandera, Absa Uganda’s Executive Director and Head of Markets said the survey is mainly reflective of strong data reporting standards and new environmental, social, and governance incentives.
He said Uganda’s score in terms of market transparency, tax, and regulatory environment registered the largest increase to 81, from 60 in 2021 and this was largely due to an improvement in Environmental, Social, and Governance (ESG) initiatives and standards after the Bank of Uganda launched a strategic five-year plan from 2022-27 which focuses on the ‘sustainability of the financial system and climatic risk’.
“Within pillar 3, Uganda continues to score among the highest for financial information transparency and corporate reporting standards.”
“Uganda’s highest score was 90 which came in pillar 6 which deals with legal standards and enforceability. This is partly due to the existence of legal provisions for the enforceability of collateral and netting-off. Uganda recently partnered with both the European Union and Front clear BV to support interbank transactions and further use of standard master agreements, which would bolster its score in pillar 6,” the index shows.
Ramathan Ggoobi, the Permanent Secretary at the Ministry of Finance said the index supports evidence-based policy development in the country by the government.
“This good performance that I expect investors and overall private sector to take advantage of and also continue to engage with government on improving the business environment for even better performance on all these indicators is much welcome,” Ggoobi said.
He said there is some room for improvement despite a stellar performance in all the areas of assessment
“With respect to a market depth where we scored only 46% and capacity of local investors where we scored a miserable 14%, the poor performance may be attributed to lack of access to reliable and affordable capital to the high cost and inefficiency of our infrastructure especially electricity, transport costs and also low adaption to the technology of doing things better,” Ggoobi said.
“Government through our national business development services will strengthen the management capacity of our local businesses to boost their competitiveness, nationally, regionally, on the continent and international level and we hope this will address the market depth and capacity challenges that our local investors face,” Mr. Ggoobi said, noting that government has encouraged capital increment for financial institutions so that there is the availability of money for investors and that they are robust enough.
