Uganda Ranks Among Africa’s Top Financial Markets in 2024 Absa Index

Uganda has reaffirmed its standing as one of Africa’s leading financial markets, securing fourth place in the 2024 Absa Africa Financial Markets Index. The annual report, unveiled in Kampala on January 28, highlights Uganda’s robust macroeconomic stability and strides in market transparency, even as challenges persist in market depth and pension fund development.

With an overall score of 63—an improvement from 62 in 2023—Uganda ranks behind South Africa, Mauritius, and Nigeria. The index evaluates 29 African economies based on six key financial market indicators: market depth, access to foreign exchange, transparency, pension fund development, macroeconomic environment, and legal standards.

Uganda excelled in macroeconomic stability, earning 87 points—the second-highest among all assessed nations. The report credits this success to prudent fiscal policies, declining inflation, and a strengthening foreign reserve position. The country also received 85 points in legal standards and enforceability, reflecting progress in regulatory frameworks and alignment with international financial norms.

Market transparency emerged as another strong area, with Uganda scoring 76 points due to improvements in governance and corporate reporting. Despite this, Mauritius continues to lead the continent in transparency with a score of 95.

However, Uganda faces hurdles in market depth, where it scored 46 points, reflecting a relatively illiquid financial sector that lacks the product diversity seen in more mature markets such as South Africa and Mauritius. Pension fund development remains a key weakness, with Uganda scoring just 15 points—one of the lowest in the index. By contrast, Namibia leads with a perfect score of 100 in this category.

Michael Ating-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 remarkable strides in macroeconomic stability and transparency,” Ating-Ego stated at the report’s launch. “The future of Uganda’s financial market is not just a vision—it is an opportunity.”

He reiterated the central bank’s commitment to maintaining a stable monetary policy to foster investment and economic growth. However, he cautioned that geopolitical uncertainties could present risks, necessitating financial innovation and a strong fiscal framework.

The report underscores the importance of developing Uganda’s pension system and diversifying financial products to compete with top financial markets on the continent. Continued policy reforms are essential for building a more dynamic financial ecosystem.

Jeff Gable, chief economist at Absa Group, noted that Africa’s financial markets, including Uganda’s, are increasingly shaped by global economic trends. He highlighted that economic policies under the new U.S. administration could impact global financial markets, influencing capital flows and investor confidence in Africa.

Uganda’s financial trajectory will also hinge on its management of oil revenues, debt sustainability, and infrastructure investments. The country’s participation in the East African Community (EAC) and the African Continental Free Trade Area (AfCFTA) presents additional opportunities for financial market expansion.

Now in its eighth edition, the Absa Africa Financial Markets Index—developed in collaboration with the Official Monetary and Financial Institutions Forum (OMFIF)—serves as a benchmark for assessing Africa’s financial sector progress. As Uganda looks to the future, deepening its financial markets and strengthening its pension framework will be critical in solidifying its position as a top financial hub on the continent.