Treasury Management Internation Logo

Fourth Annual Absa-OMFIF Report Shows African Markets Face Extreme Test of Resilience Due to Covid-19


Covid-19 has made the underlying structure and resilience of African financial markets a more important matter for domestic and international investors, as the continent grapples with returning to sustainable growth, the Absa Africa Financial Markets Index shows.

Now in its fourth year, the index, which is produced by OMFIF, has become a benchmark for the investment community to gauge countries’ performance across a range of indicators important for financial market development.

The index has expanded to 23 countries, up from 17 in the inaugural publication. The latest additions, Eswatini, Lesotho and Malawi, reflect mounting interest in the region’s potential as a source of growth and opportunity.

‘As an organisation with deep pan-African ties we are passionate about our contribution to the development of strong financial markets on the continent, the value of which has been highlighted by the challenges we are currently facing,’ said Daniel Mminele, group chief executive of Absa Group.

‘The AFMI report is a tool that helps to anchor policy discussions between regulators, exchanges, investors and corporates on how to promote open, accessible and transparent markets, which are necessary to mobilise capital and promote investment on the continent,’ Mminele added.

Key findings:

South Africa again tops the index by a wide margin, thanks to its deep capital and foreign exchange markets. Mauritius secures the runner-up position for the second year in a row, partly because of its alignment with internationally recognised legal frameworks. Nigeria, Botswana and Namibia round off the top five. Nigeria has relatively liquid markets, while Namibia and Botswana enjoy a high concentration of domestic assets from pension funds.

On average, countries’ scores in ‘market depth’ dropped by 0.6 from last year. The withdrawal of international capital impacted the region’s stock markets as liquidity dropped in the first half of the year, hampering countries’ performance in this pillar. This decline demonstrates the importance of deepening financial markets and encouraging local participation.

Countries’ scores in ‘legality and enforceability of standard financial markets master agreements’ deteriorated by an average of 8.1, reflecting a change in the basis for assessment introduced in this year’s edition.

Scoring for the enforcement on close-out netting rules is based on data and legal opinions from the International Securities and Derivatives Association, leading to significant changes in the marks of some countries, including Kenya, Tanzania, Namibia, Angola and Botswana.

Although the pandemic disrupted markets, it has presented opportunities for capital market development. The African Development Bank issued coronabonds in March to help finance Covid-19 response measures.

Other sustainability initiatives are gaining momentum, especially in green finance. Nigeria, Kenya and Egypt are among countries that have issued sovereign green bonds in the past year. Rwanda is establishing a green investment bank, while Uganda plans to develop a fund for post-disaster environmental restoration.

‘Worldwide, investors are urging African countries to step up efforts to improve their financial market structures as a crucial means of returning to sustainable growth. The index tracks these developments and provides clear benchmarks for progress,’ said David Marsh, chairman of OMFIF. ‘African counties can help each other by learning best practice from each other – and then implementing it.’

Download the full report here

Most recent episodes

Realising Treasury’s True Value – A Strategy for Change

Join John Meehan (Froneri) to hear how Froneri utilised a year of no acquisitions and no meetings to implement a total transformation project through implementation of a TMS, unlocking the true value of his corporate...


Lessons from Innospec on Building a Strong Cash Culture

Without ready access to the key metrics of cash forecasting, Andrew Hawes (Innospec) knew the business could do little more than react to events. But without the collaboration of key stakeholders too, he knew that...


How to Make Your TMS the Ultimate Investment Tool

The right TMS can be a huge asset to treasury. But these one-stop shops often fall short when it comes to short term investment workflows. In this podcast, Ed Lopez, James Griffin (Calastone), Jeannot Jonas (Carrier...


Best Strategies for Driving Cash Visibility: Advice You Can’t Google

What are the best strategies for facilitating cash visibility, and how can treasurers promote everlasting tech adoption within their departments? Serrala’s Nancy Zhang...


Innovations in Retail Payments

The fallout from the pandemic has radically accelerated changes in consumer behaviour on a global scale. The payments sector has had to quickly adapt in order to keep up with the emerging demands of both digital consumers and retail corporates, resulting in some...


The Future of ESG in Treasury

In this podcast, Melissa Moi, Peter Jameson and Venkat ES from Bank of America join TMI’s Eleanor Hill to determine where the ESG journey is heading next. Our expert panel consider how changing regulation, technology solutions and metrics including ESG KPIs...


HSBC’s Sibos Spotlight: Investing in the Future – from Diversity to Green Deposits

In the final instalment of HSBC’s Sibos Spotlight, Eleanor Hill (TMI) invites Nadine Lagarmitte and Suraj Kalati (HSBC) to consider how corporates’ attitudes to...


HSBC’s Sibos Spotlight: The ESG Landscape – what every treasurer needs to know

In the third edition of HSBC’s Sibos Spotlight Podcast series, TMI’s Eleanor Hill invites Farnam Bidgoli (HSBC) to provide an in-depth overview of the current ESG...


The Path to Transformational Global Cash Visibility

Davina Bradley (CEVA Logistics) and Conor Deegan (CashAnalytics) join TMI’s Eleanor Hill to explore how treasurers can transform their cash visibility and forecasting within their business in a matter of weeks using a...


HSBC’s Sibos Spotlight: Embedding ESG in Trade and Supply Chains

In the second podcast from HSBC’s Sibos Spotlight series, TMI’s Eleanor Hill speaks to Surath Sengupta (HSBC) about embedding ESG into trade and supply chains....