Uganda has for the fourth year running maintained its 10th position in the Absa Africa Financial Markets Index report released by Absa Bank.
The financial index by Absa evaluates financial market development in 23 countries and highlights economies with the most supportive environment for effective markets.
According to the latest index, Uganda’s score increased to 52 out of 100 in 2019/20 but this was not enough as the East African country still lagged behind leaders South Africa, Mauritius, Nigeria, Botswana, Namibia, Ghana, Kenya, Morocco and Zambia respectively.
In the East African region, Uganda comes second behind Kenya and Tanzania and Rwanda follow respectively.
Speaking about the same, the Deputy Governor BoU, Michael Atingi-Ego said that whereas Uganda has remained 10th for four consecutive years and many people see it as a stagnation, optimists view it as stability and resilience.
“Also, our national score increased from 50 in 2017/18 to 52 out of 100 in 2019/20. So, while Uganda has somewhat consolidated its ground, a lot of room remains to be covered. Uganda’s strength in access to foreign exchange, ranking only behind South Africa, is anchored on a liquid forex market, healthy foreign exchange reserves that are above 5 months of import cover as well as a vibrant interbank swaps and forwards market that is supported by an active interbank money market,”Atingi-Ego noted.
He added that Uganda also scores strongly in market transparency, tax and regulatory environment, ranking sixth overall and number one in the East African region.
“This reflects the moderate risk of national debt distress, sustaining of the sovereign credit ratings at “B” by Standard and Poor’s and “B+” by Fitch Ratings, and compliance with International Financial Reporting Standards together with the commendable tax and accounting environment that is overseen by an independent oversight body –the Institute of Chartered Public Accountants of Uganda.”
The Deputy BoU governor however noted that Uganda has a lot to learn from its peers to catch up in market depth, the capacity of local investors, as well as the legality and enforceability of standard financial market master agreements.
“A host of reforms are underway to address the poor performance in some indicators, for better ranking in the future. For example, to boost market depth by enhancing the size, liquidity and diversity of market products, the Bank of Uganda together with stakeholders, has undertaken a set of interventions,” he noted.
The Absa Africa Financial Markets Index is aimed at showing present positions, as well as how economies can improve market frameworks to bolster investor access and sustainable growth.
The index assesses countries according to market depth; access to foreign exchange; market transparency, tax, and regulatory environment; capacity of local investors; macroeconomic opportunity; and enforceability of financial contracts, collateral positions, and insolvency frameworks.