The third restatement of Absa Africa Financial Markets Index pointed to a massive stride undertaken by African countries in developing their financial markets. This was indicated by the current increased number of 13 out of a total 20 countries obtaining a 50 plus score out of 100 as against 3 countries reported in 2017.
Factors involved in evaluating nations included depth and transparency of markets, foreign exchange accessibility, functioning of regulatory and tax authorities, local investor capacity, adherence to global legal standards and macroeconomic opportunity.
As per the 2019 results, South Africa obtained an overall top score due to domestic capital availability and depth of its markets but when compared individually Egypt happened to surpass them and obtain top ratings in ‘macroeconomic opportunity’. The 20 nation total average score rose from an earlier 49.6 to 52.7.
Ethiopia which is still a low ranked country in terms of infrastructure for financial markets is also expected to make rapid strides in the wake of an announcement for launch of a stock exchange around 2020.
Several examples could be quoted in terms of bonds introduced or stock exchanges launched by countries to boost their financial markets. Countries like Nigeria, Namibia, Seychelles, Mauritius, Angola, Ivory Coast and Cameroon were just to name a few of the countries included in this list.
Several changes were undertaken by countries on the policy front too to give a boost to the financial development.
The 2017 inaugural index underlined the downsides of rigid foreign exchange rules which restricted investors and countries alike tomove with international developments and since then many countries have adopted flexible rates which give them better shock absorption capacity.
Policymakers of several African countries are revolving their earnest effort around the Absa findings said global market head for Absa’s regional market operations.
The Absa index is becoming an important tool for reshaping the African economies as policymakers increasingly turn to it for evaluating and developing their schemes.