FX Scarcity Weighed Down Nigeria’s Ranking in Africa Financial Markets Index 2024
Nigeria secured third place in the 2024 Absa Africa Financial Markets Index (AFMI) with an overall score of 64, following South Africa and Mauritius, which maintained scores of 87 and 77, respectively. Nigeria’s decline from last year’s 65 points is largely attributed to economic challenges, such as high inflation and foreign exchange (FX) shortages. The AFMI, now in its eighth year, evaluated 29 African countries on key financial market indicators like market accessibility, transparency, and economic stability, providing benchmarks for investors and insights for policymakers across the continent.
Nigeria’s scores across the six AFMI pillars reflect a mixed performance. For example, in Pillar One, which examines market depth, Nigeria scored 57 percent, showing strong product diversity but limited liquidity in domestic markets. In Pillar Two, which evaluates FX accessibility, Nigeria experienced a notable drop to 52 points, impacted by reduced FX reserves and low FX liquidity. However, Nigeria achieved higher scores in transparency, particularly in corporate reporting standards and regulatory frameworks, reflecting progress in financial disclosure and governance.
Despite these strengths, Nigeria faced challenges in pension fund development and macroeconomic stability, ranking 9th and 12th in Pillars Four and Five, respectively. The nation’s pension assets declined due to naira devaluation, and inflation pressures further reduced economic resilience. Nigeria’s legal standards were among its high-performing areas, securing the 4th position, highlighting the country’s progress in enforceability and alignment with international standards for financial markets. The AFMI underscores the importance of structural reforms in supporting Nigeria’s financial market competitiveness.
