Uganda has preserved its fourth-place ranking in the Absa Africa Financial Markets Index for 2024, despite a slight decrease in its overall score from 62 to 63.
The financial index by Absa evaluates financial market development in 23 countries and highlights economies with the most supportive environment for effective markets.
The latest report released on Tuesday indicated Uganda fell behind South Africa Mauritius and Nigeria in the first, second and third positions respectively.
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.
In the 2024 index, Uganda was credited for its macroeconomic environment and transparency where it only came second to Namibia but also a stellar performance in terms of legal standards and enforceability which saw the East African nation score 85, in fifth position below Mauritius, South Africa, Ghana and Nigeria.
“Tradeclear was launched in Uganda in June 2024 allowing repurchase transactions under local Global Master Repurchase Agreements and various derivative products under the International Swaps and Derivatives Association,” the index says.
However, Uganda performed poorly on the front of market transparency, tax and regulatory environment scoring 76 in 11th position, below peers Kenya and Rwanda who scored 85 and 84 respectively.
Whereas Uganda came 9th in terms of market depth, its 46 score is still low, compared to leaders South Africa at 100.
In terms of pension fund development Uganda only scored 15 and in 19th position.
Overall, Uganda beat all her East African peers including Rwanda, Kenya and Tanzania in the latest index.
The latest edition of the index shows the highest proportion of improvers yet.
With 23 countries raising their scores from the 15 countries that managed the same last year, the broad – though not universal – improvement in scoring reflects a turn for the better in the macro environment.
For many, inflation is lower, economic growth higher, foreign reserves coverage less strained and access to global funding markets looks brighter.
“This is a welcome respite after several difficult years during which the continent faced first the challenges of the global Covid-19 pandemic, then higher domestic inflation and financing costs. Debt restructuring in some African markets and worries about debt sustainability in many more have served to further interrupt Africa’s recovery,” the index report says.