Fifth annual Absa-OMFIF Africa Financial Markets Index finds that African markets are still innovating amid liquidity struggles.
African markets endured a second difficult year, with illiquid markets continuing to dampen index scores amid the Covid-19 pandemic. Innovations in sustainable finance and digital transformation could be key to reinvigorating markets and important initiatives are underway across markets in these areas.
- Out of 23 countries in the index, 19 score lower than last year. This decline reflects more difficult market conditions, methodological changes and the inclusion of environmental, social and governance indicators in the index. Despite the fall in scores, few examples reveal an underlying deterioration in the policy, regulatory or developmental environment in any of the index countries.
- The inclusion of ESG initiatives in the formal scoring highlights important developments and opportunities in this area, though at the cost of impacting the scores of those countries for which work is at an early stage. Only 13 countries in the index have ESG-focused policies in financial markets and nine countries have introduced sustainable finance products.
- South Africa, Mauritius and Nigeria maintain their lead in the index, though with scores slipping in 2021 for all three.
- Ghana and Uganda enter the top five for the first time, both earning points for progress in Pillar 6: Enforceability of standard master agreements.
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