The Independent Uganda: You get the Truth we Pay the Price
However, the country’s financial sector remains relatively illiquid and lacks the product diversity seen in more advanced markets such as South Africa and Mauritius
Kampala, Uganda | JULIUS BUSINGE | Uganda has maintained its position as one of Africa’s top financial markets, ranking fourth in the 2024 Absa Africa Financial Markets Index. The annual report, released in Kampala on Jan.28, highlights the country’s strong macroeconomic stability and improvements in market transparency while flagging challenges in market depth and pension fund development.
Uganda secured an overall score of 63, a marginal increase from 62 in 2023, trailing behind South Africa, Mauritius, and Nigeria, which hold the top three spots. The index, which assesses 29 African economies, evaluates financial market infrastructure across six key pillars: market depth, access to foreign exchange, market transparency, pension fund development, macroeconomic environment, and legal standards.
Macroeconomic strength, but market depth lags
Uganda performed particularly well in macroeconomic stability, scoring 87 points—the second-highest among all assessed countries. The report attributes this strength to robust fiscal policies, a declining inflation rate, and an improving foreign reserve position. The country also earned 85 points in legal standards and enforceability, signaling progress in regulatory frameworks and compliance with international financial regulations.
Market transparency emerged as another bright spot, with Uganda scoring 76 points, reflecting improvements in governance and corporate reporting. However, Mauritius remains the continental leader in this category, scoring 95 points.
Despite these strengths, Uganda continues to struggle with market depth, scoring 46 points. The country’s financial sector remains relatively illiquid and lacks the product diversity seen in more advanced markets such as South Africa and Mauritius.
Additionally, pension fund development is a major weak point, with Uganda scoring only 15 points—one of the lowest in the index. In contrast, Namibia achieved a perfect score of 100 in this category.
Deputy Governor of the Bank of Uganda, Michael Ating-Ego, acknowledged the progress made but underscored the need for further reforms to enhance market competitiveness.
“Uganda has made significant strides in establishing a stable macroeconomic environment and enhancing transparency,” Ating-Ego said at the report launch. “The future of Uganda’s financial market is not just a dream; it is an opportunity.”
He emphasized that the central bank remains committed to maintaining a stable monetary policy to support investment and economic growth. However, he cautioned that geopolitical uncertainties could pose risks, necessitating continued innovation in financial products and a strong fiscal policy framework.
The report stresses that for Uganda to compete with leading financial markets on the continent; it must prioritize pension system development and broaden financial product offerings. It also calls for ongoing policy reforms to create a more vibrant financial ecosystem.
Global and regional economic implications
Jeff Gable, chief economist at Absa Group, noted that Africa’s financial markets, including Uganda’s, are increasingly influenced by global economic trends. He pointed out that developments in the United States under President Donald Trump’s new administration will shape global financial markets, affecting capital flows and investor sentiment in Africa.
Additionally, Uganda’s economic management—particularly in areas such as oil revenue utilization, debt management, and infrastructure investment—will be closely monitored. The country’s integration within the East African Community (EAC) and the African Continental Free Trade Area (AfCFTA) presents further opportunities for financial market expansion.
Now in its eighth edition, the Absa Africa Financial Markets Index, produced in partnership with the Official Monetary and Financial Institutions Forum (OMFIF), serves as a key benchmark for assessing Africa’s financial sector progress. As Uganda looks ahead, its ability to deepen its markets and strengthen its pension framework will be crucial in cementing its place as a leading African financial hub.
