Uganda has maintained its position as one of Africa’s top financial markets, securing a fourth place in the 2024 Absa Africa Financial Markets Index.
This is according to the annual report recently released by Absa Group. It highlights Uganda’s strong macroeconomic stability and improving market transparency but underscores challenges in market depth and pension fund development.
The Absa Africa Financial Markets Index, produced in collaboration with the Official Monetary and Financial Institutions Forum (OMFIF), assesses 29 African economies based on six key financial market pillars: market depth, access to foreign exchange, market transparency, pension fund development, macroeconomic environment, and legal standards. Uganda registered an overall score of 63 points, marking a slight increase from 62 in 2023. Uganda follows South Africa, Mauritius, and Nigeria, which occupy the top three positions.
Her strong performance in macroeconomic stability, where it scored 87 points, positioned it as the second-highest among the assessed countries. The report attributes this success to robust fiscal policies, declining inflation, and an improving foreign reserve position.
Additionally, legal standards and enforceability emerged as a key strength, with Uganda achieving 85 points, reflecting progress in financial regulation and compliance with international standards. Market transparency, another strong area, saw Uganda score 76 points, attributed to enhanced governance and corporate reporting. However, Mauritius remains the leader in this category with a score of 95 points.
Despite these strengths, Uganda continues to struggle with market depth, scoring only 46 points, signaling a relatively illiquid financial sector with limited product diversity compared to leading African markets such as South Africa and Mauritius.
Pension fund development remains a critical weak spot, with Uganda registering just 15 points, one of the lowest scores in the index. In contrast, Namibia achieved a perfect score of 100, underscoring the need for Uganda to prioritize pension system reforms.
Speaking at the report’s launch, Michael Atingi-Ego, Deputy Governor of the Bank of Uganda, acknowledged the country’s progress but emphasized the need for further reforms to enhance market competitiveness.
“Uganda has made significant strides in establishing a stable macroeconomic environment and enhancing transparency,” said Atingi-Ego. “The future of Uganda’s financial market is not just a dream; it is an opportunity.”
He reiterated the central bank’s commitment to maintaining stable monetary policy to support investment and economic growth. However, he cautioned that geopolitical uncertainties could pose risks, necessitating financial product innovation and strong fiscal frameworks.
The report stresses that for Uganda to compete with Africa’s top financial markets, it must prioritize:
- Expanding pension fund development to increase long-term capital availability.
- Deepening financial markets by introducing more diverse investment products.
- Enhancing policy reforms to attract more foreign and domestic investors.
- Global and Regional Economic Outlook
According to Jeff Gable, Chief Economist at Absa Group, global economic trends will play a crucial role in shaping Africa’s financial markets. “Developments in the United States under President Donald Trump’s new administration will influence global capital flows and investor sentiment, including in Africa,” Gable noted.
Additionally, Uganda’s economic management—particularly in oil revenue utilization, debt management, and infrastructure investments—will be closely watched. The country’s deepening integration within the East African Community (EAC) and African Continental Free Trade Area (AfCFTA) presents further opportunities for financial market expansion.
Now in its eighth edition, the Absa Africa Financial Markets Index serves as a key benchmark for assessing financial sector progress across the continent.