Nairobi — Kenya has moved up two positions in the latest Absa Financial Markets Index (AFMI) attributed to better environmental, social, and governance (ESG) market frameworks in the financial sector
The country ranked eighth out of 26 countries after obtaining 61 points, up from 55 in the same period last year which saw it rank 10th.
Kenya was lauded for making progress in sustainable finance during the report's release in London, owing to progress in adopting ESG policies and frameworks, as well as improving market transparency, tax, and regulatory environments in capital markets.
In particular, the AFMI 2022 report recognized the incorporation of climate risks into financial stability regulation in Kenya.
Neighbouring Uganda ranked highest in the East African region at fourth place, up from sixth place last year, due to strides in stabilizing foreign exchange rates as well as making long-term plans to transform the capital markets and economy by adopting international standards.
The AFMI, now in its sixth year, presents a broad view of financial market progress.
The Index showed improving market infrastructure in the continent as countries responded positively to the need to develop domestic financial markets to protect economies from external shocks.
"Africa looks like an attractive investment destination based on capital market structures that actively guide adequate risk pricing. There are many areas on which to build."
"Unstinting efforts by the private sector - together with the International Monetary Fund, multilateral development institutions, and our network of partner institutions around Africa - are required to extend these positive changes," said David Marsh, Chairman of the Official Monetary and Financial Institutions Forum (OMFIF).
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This year, coverage has expanded to 26 countries with the addition of the Democratic Republic of the Congo, Madagascar, and Zimbabwe.
Even as challenging market conditions weighed on performance in the index, 19 of the 26 countries improved their scores relative to last year.
This was largely due to broad-based progress in developing sustainable financial markets, which is becoming increasingly important to global investors.
Greater product diversity lifted scores for most countries too, including Angola and Lesotho, which both issued their first initial public offerings over the past year.
According to the report, continued progress on sustainability, digitalization, and financial inclusion will be crucial to improve Africa's appeal and access for investors, enabling the continent to develop its resilience to any future external shocks.
Charles Russon, Chief Executive of Absa Corporate and Investment Banking, said the index has had a positive impact on the development of financial market infrastructure, product development, and policy on the African continent.
