Uganda ranked top in East Africa for openness to foreign investment

Uganda has been ranked top in East Africa and fifth in Africa for openness to foreign investment by Absa’s 2021 Financial Markets Index.

Absa Group Limited is listed on the Johannesburg Stock Exchange and is one of Africa’s largest diversified financial services groups.

Its index evaluates financial market development in 23 countries, and highlights economies with the most supportive environment for effective markets.

The aim is to show present positions, as well as how economies can improve market frameworks to bolster investor access and sustainable growth.

The index assesses countries according to six pillars: market depth; access to foreign exchange; market transparency, tax and regulatory environment; capacity of local investors; macroeconomic opportunity; and enforceability of financial contracts.

The Official Monetary and Financial Institutions Forum (OMFIF) conducted extensive research using data from central banks, securities exchanges and international financial institutions.

OMFIF surveyed over 50 policymakers, regulators and executives from financial institutions operating across the 23 countries, including banks, securities exchanges, central banks, regulators, audit and accounting firms, and international financial and development.

Report findings

South Africa, Mauritius and Nigeria maintain their lead in the index, despite having lower overall scores than last year’s. Ghana and Uganda enter the top five for the first time, both earning points for progress in the enforceability of standard master agreements.

Seychelles had a challenging year, experiencing severe exchange rate volatility.  It falls five places in the index, the only country with scores falling in all six pillars, the report said.

Ghana, Nigeria and South Africa earn full points in Pillar six of enforceability of standard master agreements.

The Bank of Ghana issued a notice recognising netting arrangements for transactions using global standard documentation.

It said Uganda, in fourth place, enacted legislation late last year with provisions for enforcing close-out netting and collateral arrangements.

“Uganda is linking together the central securities depository of the central bank and the stock exchange to facilitate retail trading of government securities,” it said.