Institutional factors in Africa, comprising governance, political stability, and cultural considerations, also significantly influence the transparency of financial markets.
Other factors such as inflation, government debt, GDP, external debt, GDP per capita, and fiscal balance also impact financial markets.
Notably, the Absa Africa Financial Markets Index reported significant market developments in 2024, including major FX reforms in Egypt, Ethiopia, and Nigeria, shifting towards more market-based regimes.
Other notable improvements stemmed from favorable global financial conditions which have supported activity in securities markets, the value of pension fund assets and foreign exchange reserve adequacy.
The report also highlighted improved macroeconomic conditions, noting a decline in inflation across the continent over the past year.
Key drivers of financial market transparency
The key drivers of financial market transparency were assessed based on factors that promote financial market development, including regulatory frameworks, tax regimes, and market transparency.
To determine country rankings, the evaluation considered several processes, such as financial stability regulation, corporate governance and reporting standards, tax environment, transparency of financial information, environmental, social, and governance (ESG) initiatives and standards, and the existence of credit rating agencies.
The report highlighted the ongoing importance of Environmental, Social, and Governance (ESG) reviews in promoting resilient and attractive financial markets across Africa.
Additionally, stress testing has been introduced as a key review factor and is now implemented in eight countries, marking significant progress since 2021.
Furthermore, credit ratings play a crucial role in financial transparency, providing investors with in-depth analyses of the creditworthiness of sovereign and corporate entities.
“In the 12 months to June 2024, 15 countries experienced a rise in the number of corporate credit ratings by international rating agencies such as S&P, Fitch and Moody’s” the report noted.
The table below shows the top 10 African countries with the most transparent financial markets during the period;
| Rank | Country | Score |
|---|---|---|
|
1 |
Mauritius |
95 |
|
2 |
South Africa |
91 |
|
3 |
Egypt |
88 |
|
4 |
Nigeria |
86 |
|
5 |
Morocco |
85 |
|
6 |
Kenya |
85 |
|
7 |
Rwanda |
84 |
|
8 |
Zimbabwe |
82 |
|
9 |
Zambia |
77 |
|
10 |
Botswana |
77 |
Mauritius, with the highest score of 95, stands out for its strong democratic institutions, economic diversification, and high transparency.
South Africa follows with a score of 91, benefiting from advanced infrastructure and a well-developed financial sector.
Egypt, ranking third with 88 points, leverages its strategic position and economic reforms to drive growth.
Nigeria, scoring 86, is Africa’s largest economy, fueled by oil, fintech, and agriculture.
Morocco, with a score of 85, maintains a stable political environment and a business-friendly economy.
