The Absa Africa Financial Markets Index 2023 reveals there has been continued progress in developing financial markets across Africa in the past year, with many AFMI countries taking steps to bolster their resilience against global market shocks.
Now in its seventh year, the index scores African countries’ financial development based on measures of market accessibility, openness and transparency. With support from the United Nations Economic Commission for Africa, coverage in this year’s report has grown to 28 economies with the addition of Cabo Verde and Tunisia. The aim of the report is to show how countries can reduce barriers to investment and boost sustainable growth.
To construct the index, OMFIF conducted extensive quantitative research and data analysis with surveys of over 50 organisations across Africa, including central banks, securities exchanges, regulators and market participants.
For the second year running, scores have risen for the majority of AFMI countries. They increased in 15 countries largely due to an improvement in market transparency, particularly a rise in the number of credit ratings. Most countries also score higher as macroeconomic conditions have generally stabilised following shocks from the pandemic and the Russia-Ukraine conflict.
Key findings from the index include:
• Among the biggest improvements were Zimbabwe and Rwanda, rising by almost two points each overall, linked to progress in building sustainable financial market frameworks.
• The majority (71%) of AFMI countries now implement some form of environmental, social and governance initiatives, up from 57% in 2021. This is helping to mobilise new investment as sustainability becomes increasingly important to global investors.
• Survey respondents in nine AFMI countries mentioned measures for improving central security depositories to enhance efficiency.
• New assets are becoming available on domestic exchanges, including the first sukuk bonds in South Africa and Tanzania.
• While not directly impacting scores, survey participants mentioned various financial inclusion policies to boost local investor capacity.