Uganda has improved its overall position in the Absa Africa Financial Markets Index (AFMI) for 2021, jumping five slots from 10th in 2020 with a score of 52 to 5th in the latest ranking with a score of 57 – being one of only 3 countries that improved their ranking the most.
The index is conducted by Absa Group in partnership with the Official Monetary and Financial Institutions Forum (OMFIF) and measures the performance of 23 African countries to promote open, accessible and transparent markets that are best placed to mobilize capital and promote investment on the continent.
It rates the countries’ financial markets across six pillars, namely: Market Depth; Access to foreign exchange; Market transparency, tax and regulatory Environment; Capacity of local investors; Macroeconomic opportunity and Enforceability of standard financial markets master agreements.
Uganda achieved its highest score under Pillar 6: Enforceability of standard master agreements, which was aided by the National Payment Systems Act - enacted during the second half of 2020. Under Pillar 1: Market depth, Uganda moved up one rank and increased its score by three points thanks to an increase in outstanding sovereign bonds by 67% to $5.1bn.
Similarly, the equities market capital increased to just under $6bn in June 2021, up from $5bn the previous year.
The country’s performance was revealed during an economic outlook forum hosted by Absa Bank Uganda, featuring submissions from the Bank of Uganda, the Ministry of Finance, Planning and Economic Development, Capital Markets Authority, Uganda Securities Exchange and several other public and private sector players.
David Wandera, Absa Bank Uganda’s Executive Director and Head of Financial Markets said, “Generally, the places that we need to focus on are those where Uganda performed lowest, that is under Pillar 4: Capacity of local investors where we are ranked 11th and Pillar 3: Market transparency, tax and regulatory environment.”
Speaking to the latter, he added that Uganda still has the highest tax on dividends for East African investors at 15%, compared to Tanzania, Rwanda and Kenya – which are at 5%, but appreciated the steps being taken by the government to address this concern.
While addressing the guests, Ramadhan Ggoobi, the Permanent Secretary in the Ministry of Finance, said, “The government is mindful of the many challenges faced by the private sector in recent times. As such, we don’t intend to introduce new taxes or increase the current taxes, but we will enforce more and prioritise compliance, in addition to getting more people into the tax bracket.”
Michael Atingi-Ego, the Deputy Governor of Bank of Uganda, said, “Uganda’s inspirational ranking amidst a raging Covid-19 pandemic should galvanize us to sustain the good policies and interventions as well as to undertake the strategies that will unleash the power of our financial market to drive economic growth and socio-economic transformation.”
He added that the Central Bank is determined to work with all the stakeholders to ensure consolidation towards improving the country’s commendable ranking in the AFMI.