The Absa Africa Financial Markets Index 2023 reports continued progress in developing financial markets across Africa, with a notable improvement in countries like Zimbabwe and Rwanda. The index highlights that 71% of AFMI countries now implement some form of environmental, social, and governance (ESG) initiatives, indicating a growing focus on sustainability. Despite this progress, challenges stemming from global conditions, such as rising interest rates in advanced economies, continue to impact exchange rates, capital flows, and foreign exchange reserves in Africa.
Key Points:
- Zimbabwe and Rwanda showed significant improvement in their overall scores, largely attributed to progress in building sustainable financial market frameworks.
- 71% of AFMI countries now implement ESG initiatives, up from 57% in 2021, attracting new investment as global investors prioritize sustainability.
- Measures to enhance central security depositories were mentioned as a key area for improvement by survey respondents in nine AFMI countries.
- New assets, including the first sukuk bonds, are becoming available on domestic exchanges in countries like South Africa and Tanzania.
- While 17 countries have shown improved scores since their introduction to the index, there remains a significant gap between the highest scoring countries and the rest.
Analysis: The Absa Africa Financial Markets Index underscores the resilience and progress of financial markets in Africa, even in the face of global economic challenges. The growing adoption of ESG initiatives and efforts to enhance market infrastructure demonstrate a commitment to sustainability and efficiency. However, the uneven progress among countries highlights the need for further reforms and improvements. The index serves as a valuable tool for policymakers, investors, and stakeholders in assessing the strengths and areas for development in Africa’s financial markets.
