KAMPALA – Uganda has been ranked as the highest-growing financial market within the East African region and 4th on the continent, according to the latest Africa Financial Markets Index by Absa Bank.
Uganda scored 63 percent, followed by Kenya at 59, Tanzania at 55 percent, and Rwanda at 44 percent.
In Africa, Uganda only ranks behind investment hubs South Africa at 88 percent, Mauritius at 77, and economic powerhouse Nigeria at 67 percent.
Scoring high in macro-economic environment and transparency, legal standards, and enforceability, Uganda also maintained a 79 percent score in market transparency, tax, and regulatory environment.
Despite maintaining her position, Uganda’s overall score declined to 62.8 percent in 2023, from 64.4 percent the year before.
“The decrease was mostly driven by weaker performance in access to foreign exchange,” the survey shows, also indicating that Uganda’s score fell by 10 points to 67 due to relatively lower scores for interbank FX turnover and international reserves adequacy.
“Reserves declined by almost 18% to $3.6bn in 2022, equivalent to 3.4 months of imports, from 4.6 months a year prior,” the survey adds.
The Absa Africa Financial Markets Index, now in its seventh year, assesses the openness and attractiveness of financial markets in African countries. It tracks countries’ efforts to improve capital markets through their performance on six benchmarks – market depth, access to foreign exchange, market transparency and regulatory standards, domestic investor capacity, macroeconomic climate and transparency, and legal standards and enforceability.
Mr. Mumba Kalifungwa, Absa Bank Uganda’s Managing Director, said the country’s lowest score was in the Capacity of local investors.
The category fell by 1 point to 14 percent, as pension fund assets per capita slipped to $119 in 2022, from $125 in 2021.
“Building liquidity in domestic markets is another key area for improvement,” he said, adding that “Turnover across listed equities was just 0.3% of market capitalization in the year to June 2023”.
“Limited liquidity in domestic bond markets also restrains Uganda’s score in Market depth,” he added.
“Uganda’s ranking has improved from tenth when the report was first released in 2017 to fifth in 2021, then fourth in 2022. This position was maintained in 2023, ranking closely behind economies like Nigeria, Mauritius, and South Africa.”
Mr. Michael Atingi-Ego, Deputy Governor of the Bank of Uganda said that central bank’s decisive macroeconomic and macroprudential policy measures have helped to shield the domestic economy and financial system from the complete pass-through of various external shocks.
“Arising out of the implementation of the National Financial Inclusion Strategy 2017-2022, Uganda has experienced increased access to financial services by the wider population through the proliferation of mobile financial services and products,” said Mr. Atingi-Ego.
In the year 2023 alone, he said that the values of insurance and micro-savings amounted to UGX 3.4 billion and UGX 527.9 billion, respectively, while the value of microloans disbursed amounted to UGX 1.2 trillion.
To build on this momentum, the Bank of Uganda said the National Financial Inclusion Strategy 2023-2028 will focus on deepening savings and credit markets by expanding the usage of diversified financial products and services.
