- South Africa is once again at the top of the index due to its extensive capital and foreign exchange markets.
- Nigeria continues to make efforts in establishing an enabling investment climate for international investors…..
Ekohotblog gathered that according to the Absa Africa Financial Markets Index, as the global economy struggles to recover from the worst health crisis in a century, African economies face the twin challenges of reinvigorating financial markets while strengthening market infrastructure through technological innovation and investment-enabling policies.
In its fifth year, the OMFIF-produced index assessed financial market development in 23 nations, up from 17 in the first edition, and identifies economies with the most conducive environment for efficient markets.
According to the index study, South Africa is once again at the top of the index due to its extensive capital and foreign exchange markets. Mauritius secures the runner-up position for the second year in a row, partly because of its robust legal and market environment. Nigeria, Ghana and Uganda round off the top five.
The index assesses countries according to six pillars:
- Market depth
- Access to foreign exchange
- Market transparency, tax and regulatory environment
- Capacity of local investors
- Macroeconomic opportunity
- Enforceability of financial contracts, collateral positions and insolvency frameworks
According to the research, few nations managed to achieve more than 50 in Pillar 1: Market depth, as market capitalization grew in almost all countries in the index but not enough to counterbalance poor economic activity.
According to the study, virtually all nations’ ratings decreased in Pillar 3: Market transparency, taxation, and regulation, owing mostly to low scores in sustainability metrics. It goes on to say that South Africa is the only country that has included climate risk in its macroprudential stress testing methodology.
According to the study, several African nations suffered in Pillar 4: Capacity of local investors as 18 of the 23 countries failed to score over 50, indicating a weak potential for domestic pensions markets to drive local market activity. However, Namibia tops the pillar for having a deep pension market relative to the size of its population and securities market.
The report stated that Ghana, Nigeria, and South Africa received full points in Pillar 6: Enforceability of standard master agreements, whereas 12 nations received only the minimum. The Bank of Ghana, according to the report, issued a notification recognizing netting arrangements for transactions utilizing global standard paperwork.
Simultaneously, Nigeria continues to make efforts in establishing an enabling investment climate for international investors, through regulatory reforms and policy initiatives.
The Official Monetary and Financial Institutions Forum (OMFIF) created the 2021 index, which was sponsored by Absa Group Limited. ABSA is a South African-based financial services group.
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