At the launch of the 10th edition of the Absa Africa Financial Markets Index in Bangkok, I called AFMI one of Africa’s most consequential financial public goods. It rests on 10 years of measurement, now covering 29 economies, and on the judgement of more than 50 institutions that work in these markets. Reforms are now visible and weaknesses comparable. Global investors, development institutions and multilateral surveillance teams should use AFMI more widely.
There are already signs that this is happening. Tiaan Bazuin, chief executive of the Namibia Securities Exchange, said at the launch on 14 October that AFMI had in some ways taken the place of the now discontinued World Bank ‘Ease of Doing Business’ report.
Some years ago, an International Monetary Fund deputy managing director asked me whether finance was playing its due role in Africa’s transformation. My answer was a categorical no. It remains so today. AFMI makes the next question harder to avoid. How does market development become an engine of productive investment?
The backdrop looks kind. This week, the IMF raised its 2026 growth forecast for sub-Saharan Africa to 4.5%. The region remains among the world’s fastest growing. The Fund added a caveat: the number masks substantial divergence. This year’s average AFMI score of 56 is a decade high. It deserves the same welcome and the same caveat: an average can rise while the countries beneath it pull apart.
Spurring meaningful development
In the OMFIF podcast marking the tenth edition, Jeff Gable, chief economist and head of macro and fixed income research at Absa, described how regional rivalry spurs reform. Anthony Kirui, managing director and head of global markets, Africa regional operations, stressed that investors need credible policy decisions and outcomes. Both are right, and both describe the conditions for markets to develop, not development itself. A better macroeconomic score is not deeper intermediation.
Africa’s markets start from different places. Systems are shallow. Enterprise finance has a persistent missing middle. Depth and reach are only now growing. Even so, something is moving. Since July alone, Africa has gained a new credit rating agency, a sovereign bond exchange-traded fund and a trading link connecting 11 exchanges. Two efforts matter: strengthening domestic markets and opening regional access to broader pools of capital. Which comes first depends on where a country starts.
Both efforts aim at financial sovereignty: more room to act when external funding becomes unreliable. The sovereignty premium is the cost of keeping that room. But there is a trap. Replacing foreign creditors with domestic banks heavily exposed to government debt relocates vulnerability. It does not resolve it. The IMF’s October 2025 Global Financial Stability Report makes the same point for emerging and frontier markets everywhere, not Africa alone: deeper local investor bases do buy resilience to global shocks, but a larger domestic buyer base is not always better.
Stability remains the precondition: predictable inflation, credible monetary and exchange-rate frameworks, sustainable public debt. Where consolidation is needed, it should protect productive investment. Stronger revenues ease sovereign borrowing pressures, and trusted savings institutions mobilise long-term capital. Neither ensures that a viable business gets financed. AFMI should test that transmission rather than presume it.
Four tests for absorbing productive investment
AFMI already measures market depth, pension development and macroeconomic conditions. The next step is to connect those foundations to financing outcomes. Two capacities must grow together: the economy’s ability to absorb investment productively, and the financial system’s ability to bear the risk. The matrix rows below show those two capacities. The columns separate access from absorption. The four tests that follow read across the rows.
| Access | Absorption | |
| Domestic intermediation | Payments settle in seconds and sovereign auctions clear | Firms borrow for five to seven years and private issuers price off the sovereign curve |
| Balance-sheet resilience | More domestic holders of government paper, and access that is wide while foreign inflows last | Diversified underlying exposures, and funding that continues through a downturn |
First, fast money can coexist with slow capital. A firm may receive payments in seconds. It may still struggle to finance expansion for five years. Can a viable mid-sized firm borrow in its own currency for seven years, on commercially sustainable terms? AFMI should track maturity, cost and the range of firms financed, not just digital transactions. Equity matters too, because not every financing gap should be filled with debt.
Second, the sovereign should build the market, not become the market. Government securities provide benchmarks and collateral. An oversubscribed auction does not prove financial development. AFMI should track whether falling public financing needs are followed by broader private issuance and credit. Intermediaries still need the skills and the incentives to underwrite.
Third, changing the holder does not change the borrower. Moving sovereign paper from banks to pension funds may improve maturity matching and reduce bank concentration. Sovereign credit risk remains. AFMI should examine underlying exposures, not investor labels. Regional pooling can diversify country risk. It cannot eliminate common shocks.
Fourth, a market that works only when foreigners buy is a window, not a system. Foreign capital can share risk and test prices. Captive domestic demand does neither. AFMI should measure liquidity and funding continuity when inflows weaken. Pension funds obliged to buy do not count as resilience.
None of these calls for an overloaded AFMI. Keep the fixed good-practice benchmarks that make 10 years comparable. Add three things: a compact dashboard of financing outcomes beside the score; separate macroeconomic tailwinds from institutional improvement, so progress from a country’s starting point shows as clearly as its rank; and, where data are missing, an honest gap rather than manufactured precision. Fintech and intelligent systems belong in AFMI too, judged by whether they widen productive credit and long-term saving rather than by adoption alone. Africa has the youngest population in the world, and most of the savers and borrowers who will use these systems are still to come.
Absa and OMFIF have given Africa a decade of disciplined comparison. The next task is to make the consequences of reform equally visible. A country should be able to name an investment that happened because its market improved. Success is not more capital entering markets. It is more productive investment, financed without greater fragility. That is financial sovereignty on the ground.
Udaibir Das is Vice Chair of OMFIF.
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