Absa Index ranks Uganda’s financial sector as highest growing in East Africa

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Uganda’s financial sector has been ranked as the highest growing within the East African region by  the Absa Africa Financial Markets Index released on Tuesday in Kampala.

The financial index by Absa evaluates financial market development in 23 countries and highlights economies with the most supportive environment for effective markets.

The scores in the index are determined by the performance of each country across six key pillars: market depth; access to foreign exchange; market transparency, tax and regulatory environment; capacity of local investors; macroeconomic environment and transparency; and legal standards and enforceability.

According to the latest index, Uganda’s overall score increased by six points to 66 , moving the country up to fourth from sixth place in the rankings to beat fellow East African countries Kenya, Tanzania, Rwanda and the DR Congo.

“This is mainly reflective of strong data reporting standards and new environmental, social and governance incentives, “ David Wandera, Absa Uganda’s Executive Director and Head of Markets said while presenting the index.

He said Uganda’s score in terms of market transparency, tax and regulatory environment registered the largest increase to 81, from 60 in 2021 and this was largely due to an improvement in Environmental, Social, and Governance (ESG)  initiatives and standards after the Bank of Uganda launched a strategic five year plan from 2022-27 which focuses on the ‘sustainability of the financial system and climatic risk’.

“Within pillar 3, Uganda continues to score among the highest for financial information transparency and corporate reporting standards.”

“ Uganda’s highest score was 90 which came in pillar 6 which deals with legal standards and enforceability. This is partly due to the existence of legal provisions for the enforceability of collateral and netting-off. Uganda recently partnered with both the European Union and Frontclear BV to support interbank transactions and further use of standard master agreements, which would bolster its score in pillar 6," the index shows.

The index  also shows that Uganda’s score increase from 65 to 84 in terms of access to foreign exchange which was attributed to an improvement in foreign exchange interbank liquidity.

“The score for FX reserves adequacy also rose. This indicator stayed relatively stable at four months of imports in Uganda in 2021, while it deteriorated more significantly in other AFMI(African Financial Markets Initiative) economies.”

The index  also indicates that despite tumult in the global economy and slightly worsening inflation, Uganda’s solid growth prospects and relatively strong macroeconomic data standards means it ranks third in terms of macroeconomic environment and transparency, behind only Egypt and Botswana in Africa.


The index  however says that despite slight improvements to Uganda’s score in terms of market depth, corporate bond turnover and total equity turnover remained low in 2022.

“ Uganda continues to have a relatively low stock market capitalisation, which fell by 1.5 percentage points as a share of gross domestic product in the 12 months to June 2022 and despite the latest ESG incentives and standards, there is limited availability of ESG products (such as green bonds) on the domestic market,” the Absa Index says.

The index also says that another key area for improvement is in pillar four which focuses on capacity of local investors, where Uganda scores 14.

According to the index, pension fund assets per capita stood at $125, which is much lower than the average across all index countries of $826.


In the overall, the index indicates that South Africa, Mauritius and Nigeria maintained their positions on the continent in the top three this year, as they continue to score highly on measures of market depth, transparency and enforceability of legal agreements.

On the continent, Uganda came fourth after rising two places while Namibia and Kenya improved their ranking within the top 10.

Speaking at the release, the Ministry of Finance Permanent Secretary, Ramathan Ggoobi said the index supports evidence based policy development in the country by government.

He also hailed the country for the improvement in the index

“This good performance that I expect investors and overall private sector to take advantage of and also continue to engage with government on improving the business environment for even better performance on all these indicators is much welcome,” Ggoobi said.

He said whereas the country performed very well in four of the six indices, there is still work to do in the remaining two indices where Uganda registered a poor performance.

“ With respect to  market depth where we scored only 46% and capacity of local investors where we scored a miserable 14% , the poor performance may be attributed to lack of access to reliable and affordable capital to the high cost and  inefficiency of our infrastructure especially electricity , transport costs and also low adaption to technology of doing things better,”Ggoobi said.

“Government through our national business development services will strengthen management capacity of our local businesses to boosts their competitiveness, nationally, regionally, on the continent and international level and we hope this will address the market depth and capacity challenges that our local investors face.”

The Ministry of Finance PS noted that government has encouraged capital increment for financial institutions so that there is availability of money for investors and that they are robust enough.



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