OMFIF has launched the Africa Financial Markets Index and sponsored by Barclays Africa Group Limited (BAGL),to Expand and deepen financial markets across Africa as a central condition for the next stage of the continent’s development.
Africa’s large and dynamic markets present above-average opportunities for growth, yet investment prospects – for both international and local investors – are hampered by underdeveloped financial markets and unclear legal and regulatory frameworks.
The Index ranks the maturity, openness and accessibility of 17 financial markets in Africa, based on both qualitative and quantitative criteria. Development of local investor capacity and ability to attract foreign capital are key points of focus. Through expert analysis of the African financial markets, the Africa Financial Markets Index draws global attention to the considerable investment opportunities and uncovers the untapped market.
The Index focuses on six fundamental pillars for financial market performance including market depth, access to foreign exchange, market transparency and regulation, capacity of local investors, macroeconomic opportunity and enforceability of international financial agreements
The markets surveyed are; Botswana, Egypt, Ethiopia, Ghana, Ivory Coast, Kenya, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Rwanda, Seychelles, South Africa, Tanzania, Uganda and Zambia. The Index intends to track progress annually, supplying a toolkit for countries wishing to build financial infrastructure.
African countries are implementing a growing number of national policy frameworks for market development. One of the greatest constraints on growth-enhancing investment is the low capacity of local investors, partly linked to limitations on the range of assets for local investors.
Given its size and historical position, South Africa tops the 2017 list, despite poor recent macroeconomic performance, based on the strength of its financial markets as well as its relative openness and transparency for transactions. Others are closing the gap. Mauritius and Botswana have strengths in tax and regulation and access to foreign exchange.
Kenya and Ghana provide signs of progress. Ivory Coast, with a low overall score, is home to a growing regional bourse, pointing to future improvement. Ethiopia shows the highest GDP growth prospects of the 17 countries – even though it comes bottom of the list in terms of financial market prowess.
Liquidity, regulation, foreign exchange restrictions and policy choices are among the chief concerns for investors considering their African engagement, the survey highlights the areas where specific countries need to make genuine advances to forge strong positions in the competition for sustainable investment.
In addition to statistical analysis, OMFIF gained additional insights by surveying 60 top executives from financial institutions operating across the 17 countries, including banks, investors, securities exchanges, regulators, audit and accounting firms, and international financial and development institutions.