Botswana has moved a notch up the ABSA Africa Financial Markets Index, clinching the second spot just behind South Africa – the continent’s economic powerhouse.
The Absa Africa Financial Markets Index was produced by the Official Monetary and Financial Institutions (OMFIF) in association with Absa Group Limited. OMFIF is an independent think tank for central banking, economic policy and public investment.
Absa Group Limited is listed on the Johannesburg Stock Exchange and is one of Africa’s largest diversified financial services groups with presence in 12 African markets: Botswana, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria, Seychelles, South Africa, Tanzania, Uganda and Zambia.
The five highest ranked financial markets in the 2018 index are: South Africa, which remains in the top position; Botswana, which rose to second place from third last year; Kenya, which climbed two spots on improved access to foreign exchange; Mauritius, which moved down to the fourth place from second last year; and Nigeria, owing to improvements in administrative efficiency and tax incentives that have boosted the country’s regulatory environment.
Now in its second year, the index is a premier indicator of the attractiveness of Africa’s financial markets, covering 20 markets: Angola, Botswana, Cameroon, Egypt, Ethiopia, Ghana, Ivory Coast, Kenya, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Seychelles, South Africa, Tanzania, Uganda and Zambia.
The index provides a toolkit for countries wishing to build financial infrastructure by tracking progress annually across six pillars: market depth; access to foreign exchange; tax and regulatory environment and market transparency; capacity of local investors; macroeconomic opportunity; and enforceability of financial contracts, collateral positions and insolvency frameworks.
Out of the 20 countries surveyed, Botswana scored 65 out of 100 after showing stable performances across pillars with efforts made to improve local investor base. Under pillar 1 which measures market depth, Botswana came fourth. The diamond producing country was placed fourth under pillar 2 which factors in access to foreign exchange.
Botswana was ranked third in pillar 3 which assesses Market transparency, tax and regulatory environment. On the fourth pillar which covers capacity of local investors, Botswana was third from the top.
In terms of macroeconomic opportunity or pillar 5, Botswana was placed on fourth position. The country received its lowest ranking ÔÇô coming seventh – on pillar 6 which encompasses legality and enforceability of standard financial markets master agreements.
‘The development of well regulated, deep and liquid financial markets is a key priority that should be at the top of Africa’s development agenda. The index facilitates a meaningful debate about the maturity and accessibility of Africa’s financial markets. It is an important contribution that supports policy-makers, investors, regulators and other market participants to identify the areas and initiatives which will drive the most significant improvements,’ says Maria Ramos, chief executive officer of Absa Group.
‘It is heartening to see the advances made by African countries, in many areas, to improve the efficiency of capital markets,’ says David Marsh, chairman of OMFIF. ‘However, more remains to be done regarding the robustness of market infrastructure and regulatory frameworks across Africa and we look forward to tracking progress annually.’