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1、Absa Africa Financial Markets Index 2022Harnessing the power of African opportunityPictured:Fishermen,NamibiaAFMI_INDEX_A4 Template_2022.indd 103/10/2022 15:04:072|Absa Africa Financial Markets Index 2022Absa Group Limited(Absa Group)is listed on the Johannesburg Stock Exchange and is one of Africas

2、 largest diversified financial services groups.Absa Group offers an integrated set of products and services across personal and business banking,corporate and investment banking,wealth and investment management and insurance.Absa Group has a presence in 12 countries in Africa,with approximately 42,0

3、00 employees.The Groups registered head office is in Johannesburg,South Africa,and it owns majority stakes in banks in Botswana,Ghana,Kenya,Mauritius,Mozambique,Seychelles,South Africa,Tanzania(Absa Bank Tanzania and National Bank of Commerce),Uganda and Zambia.The Group also has representative offi

4、ces in Namibia and Nigeria,as well as insurance operations in Botswana,Kenya,Mozambique,South Africa,Tanzania and Zambia.For further information about Absa Group Limited,please visit www.absa.africaThe Official Monetary and Financial Institutions Forum is an independent think tank for central bankin

5、g,economic policy and public investment a non-lobbying network for best practice in worldwide public-private sector exchanges.At its heart are Global Public Investors central banks,sovereign funds and public pension funds with investable assets of$42tn,equivalent to 43%of world GDP.With offices in b

6、oth London and Singapore,OMFIF focuses on global policy and investment themes particularly in asset management,capital markets and financial supervision/regulation relating to central banks,sovereign funds,pension funds,regulators and treasuries.OMFIF promotes higher standards,invigorating exchanges

7、 between the public and private sectors and a better understanding of the world economy,in an atmosphere of mutual trust.For further information about OMFIF,please visit www.omfif.orgThe Absa Africa Financial Markets Index was produced by OMFIF in association with Absa Group Limited.2022 The Absa Gr

8、oup Limited and OMFIF Ltd.All Rights Reserved.Absa CIB Project TeamErica Bopape,Head of Marketing:Investment Banking,Fiona Mbalula,Marketing Manager:Investment Banking,Fiona Kigen,Marketing Manager:Investment Banking,Andile Makholwa,External Communications Manager,Jerome Raman,External Communication

9、s Manager,Varini Chetty,Digital Lead,Prudence Mlangeni,Events and Sponsorship Activations Manager,Kershnee Hermanus,Marketing Manager:Absa Regional Operations&International,David Fernandes-Collett,Chief Operating Officer:Global Markets-Absa Regional Operations,Gerald Katsenga,Head of Corporate Sales

10、,Absa Regional OperationsOMFIF Editorial,Meetings and Marketing TeamClive Horwood,Managing Editor and Deputy Chief Executive Officer,Simon Hadley,Director,Production,William Coningsby-Brown,Production Manager,Sarah Moloney,Subeditor,James Fitzgerald,Marketing Manager,Ben Rands,Director of Events,Jam

11、ie Bulgin,Relationship Director,Economic and Monetary Policy Institute,Avnish Patel,Senior Programme Manager Economic and Monetary Policy InstituteWe consulted more than 50 institutions across African financial markets,including policy-makers,regulators and market practitioners,to write this report.

12、Although some requested anonymity,we thank the following for sharing their views:Autorit Marocaine du March des Capitaux,Banco de Fomento Angola,Bank Al-Maghrib,Bank of Mauritius,Bank of Tanzania,Bank of Uganda,Bankers Association of Zambia,Banky Foibeni Madagasikara,Banque Centrale du Congo,Bolsa d

13、e Dvida e Valores de Angola,Bolsa de Valores de Moambique,Botswana AcknowledgementsStock Exchange,Bourse de Casablanca,Morocco,Capital Markets Authority,Keny,Capital Markets Authority,Uganda,Central Bank of Eswatini,Central Bank of Kenya,Central Bank of Seychelles,Central Depository and Settlement C

14、ompany,Mauritius,Dar es Salaam Stock Exchange,Tanzania,Eswatini Stock Exchange,Financial Regulatory Authority,Egypt,Financial Sector Conduct Authority,South Africa,FMDQ Securities Exchange,Nigeria,Ghana Fixed Income Market,International Finance Corporation,Johannesburg Stock Exchange,Malawi Stock Ex

15、change,Maseru Securities Market,Lesotho,Mauritius Commercial Bank,Merj Exchange,Seychelles,Namibian Stock Exchange,National Bank of Rwanda,PricewaterhouseCoopers,Ghana,PricewaterhouseCoopers,Nigeria,Reserve Bank of Malawi,Reserve Bank of Zimbabwe,Securities and Exchange Commission,Ghana,Securities a

16、nd Exchange Commission,Zambia,Stock Exchange of Mauritius,Tanzania Bankers Association,Zimbabwe Stock ExchangeIndividualsJeff Gable,Head of Macro and Fixed Income Research,AbsaIngrid Hagen,Senior Vice President of Strategic Projects,Frontclear Management BVAnthony Kirui,Head of Global Markets,Absa R

17、egional Operations,AbsaRoger Rudolph,Executive,Banking and Finance,ENSafricaPeter Werner,Senior Counsel,International Swaps and Derivatives AssociationWe also thank individuals from the Southern African Development Community and United Nations Economic Commission for Africa for their assistance.Repo

18、rt authorsNikhil Sanghani,Managing Director,ResearchJulian Jacobs,EconomistEdward Mailing,Research AssistantTaylor Pearce,EconomistWith support from Katerina Liu,Research AssistantAFMI_INDEX_A4 Template_2022.indd 203/10/2022 15:04:07Absa Africa Financial Markets Index 2022|3 ContentsForewords 4-5Int

19、roduction 6-7Executive summary 8-11Contains country comparisons and highlights opportunities and challenges for the regions fi nancial markets.Highlights 12-1314-1928-3334-3738-4120-2324-27Pillar 2:Access to foreign exchangeAssesses the openness of markets to foreign investment and the ability of ce

20、ntral banks to manage volatility from foreign capital fl ows.Pillar 3:Market transparency,taxand regulatory environmentExamines the transparency of fi nancial markets alongside the tax and regulatory environments and ESG indicators.Indicators and methodology 42-43Pillar 5:Macroeconomic environment a

21、nd transparencyAssesses countries macroeconomic environments and the transparency of economic data,which underpin the development of their fi nancial markets.Pillar 6:Legal standards and enforceabilityTracks alignment with international legal and contractual standards across fi nancial markets.Pilla

22、r 4:Capacity of local investorsEvaluates the potential for institutional investors to drive capital market growth based on the size of pension fund markets.Pillar 1:Market depthEvaluates the size and liquidity of domestic capital markets,along with the diversity of listed asset classes and the exist

23、ence of standard features that enhance market depth.AFMI_INDEX_A4 Template_2022.indd 303/10/2022 15:04:43After the strain of the pandemic,it feels as if Africas economy barely had time to catch its breath before facing a much more difficult global environment.It may feel an odd time,then,to discuss

24、the importance of financial market development for Africas long-term success.But it remains Absas belief that open,transparent and accessible financial markets remain the best way to ensure that the continent is best placed to use its domestic capital and in the strongest position to access global c

25、apital.African policy-makers,regulators,securities exchanges,and the providers and users of capital agree.One sign of the success of fostering financial market innovation is the scoring itself.The number of countries scoring above 50 in the index has doubled since our first edition in 2017 and the g

26、ap between the leading trio and the mid-pack has shrunk considerably.Impressively,19 countries lifted their performance in 2022,even in a difficult environment.Those improvements are not by chance,but rather reflect a continued focus by countries to foster a financial market ecosystem that is better

27、 placed to meet Africas financing needs.To see the proof of this,look at the growing commitment across the continent to environmental,social and governance related financing.Introduced in last years index,nine countries now offer sustainable financial products,while 17 have sustainability-focused po

28、licies in place.Countries are working hard to ensure that they are well placed to attract the sort of global capital that is focused on long-term sustainability.It is a privilege to welcome the Democratic Republic of Congo,Madagascar and Zimbabwe into the fold.At 26 countries,the Absa Africa Financi

29、al Markets Index now represents 78%of the continents population and 82%of its gross domestic product.The strength of AFMI has always been the discussion,learning and development that it fosters across Africa.I have no doubt that this years contribution will be the richest yet.This years AFMI richest

30、 yetForewordsArrie RautenbachChief Executive Officer,Absa Group Now in its sixth year,the Absa Africa Financial Markets Index evaluates countries financial development based on measures of market accessibility,openness and transparency.The aim is to show how economies can reduce the barriers to inve

31、stment which can,in turn,boost sustainable growth.The index has become a benchmark for the investment community to gauge African countries market infrastructure and is used by policy-makers to learn from developments across the continent.Aim of index4|Absa Africa Financial Markets Index 2022AFMI_IND

32、EX_A4 Template_2022.indd 403/10/2022 15:04:46Absa Africa Financial Markets Index 2022|5 When Absa and OMFIF decided in 2016 to produce a joint scorecard of capital market development across Africa,the inspiration came from many angles,but we had one principal aim.We wished to improve the means for A

33、frican countries to learn from best practice across the continent.With the index now in its sixth year and extended to 26 countries(up from 17 in the 2017 index),we have succeeded in creating a series of widely recognised benchmarks to measure and extol substantial capital markets progress.The backg

34、round has been challenging.The continent has weathered the continuing fallout of the 2008-09 financial crisis and the rise and decline of China as a force for lending and investment.On top has come Covid-19 and global upheavals including in commodities supply and demand following the Russian invasio

35、n of Ukraine.Among the drawbacks,these upsets have produced one large benefit for Africa.Global investors have sharpened their appraisal of risk,and whether or not this is fairly represented in market pricing.In view of all-too-evident problems in developed markets,Africa looks an attractive investm

36、ent destination based on capital market structures that actively guide adequate risk pricing.Despite macroeconomic headwinds,advances in sophistication,depth and transparency of African capital markets represent a considerable plus.A range of African countries now leads the field in key spheres.In o

37、ne prime example,Africa has forged ahead in meeting requirements from investors targeting economic sustainability.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 par

38、tner institutions around Africa are required to extend these positive changes.We do not wish to minimise future tasks.The index records work in progress.And it is work in which Africa can take substantial pride.Strong and resilient financial markets contribute to socio-economic stability as well as

39、the development of inclusive and sustainable economies through the efficient allocation of both internal and external resources.Due to the contraction of the global economy and unfavourable market conditions,it has become increasingly difficult for African countries to tap into international markets

40、 to finance their budgets and programmes.These challenges emphasise the need for and importance of vibrant domestic financial markets to enhance resilience to external shocks and generate alternative sources of funding.As Africa strives to achieve the 2030 Agenda for Sustainable Development and Agen

41、da 2063 of the African Union,while combatting the consequences of climate change,it requires more and innovative sources of funding as well as more inclusive financial systems.Advances in technology contribute to achieving the latter,offering equitable and universal access to affordable finance for

42、all,and ensuring that no one is left behind.Financial markets can provide innovative and streamlined solutions at scale that address the unique features of African economies and support the development of local businesses.By deepening and expanding domestic capital markets,liquidity can be increased

43、,costs of capital reduced and green and innovative instruments developed.This requires stronger institutional and regulatory frameworks that promote transparent and efficient markets and increase investor confidence.To this end,the 2022 Absa Africa Financial Markets Index,with strengthened geographi

44、c coverage and thematic scope,serves as an important tool for policy-makers and regulators in the development of financial markets on the African continent.It provides in-depth comparative analysis to support the formulation of policies for long-term financial market development.On our part,we remai

45、n committed to supporting the development of Africas financial markets and will continue to work closely with member states,think tanks and development partners.Taking pride in progressInclusive and sustainable developmentDavid MarshChairman,OMFIFAntonio PedroActing Executive Secretary,United Nation

46、s Economic Commission for AfricaAFMI_INDEX_A4 Template_2022.indd 503/10/2022 15:04:486|Absa Africa Financial Markets Index 2022The last two years have reinforced the need to develop domestic financial markets to protect economies from external shocks.While disruption from the pandemic has faded,fres

47、h challenges have emerged from the spillovers of the Russia-Ukraine war and tighter global financial conditions.Despite these difficulties,capital market infrastructure has continued to improve across Africa.This will help to build resilience and allow the continent to maximise its potential.The Abs

48、a Africa Financial Markets Index,now in its sixth year,presents a broad view of financial market progress.The index continues to evolve this year.Coverage has expanded to 26 countries with the addition of the Democratic Republic of Congo,Madagascar and Zimbabwe.More robust measures of reserves adequ

49、acy and macroeconomic stability have been introduced to better reflect countries developments.Scores for 2021 have been made consistent with this new methodology,and updated to include any relevant new data,to allow for accurate year-on-year comparisons(see p.43 for more details).While challenging m

50、arket conditions weighed on performance in the index,19 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.Namibia,Uganda and Kenya are among the c

51、ountries with the greatest increase in scores.They have bolstered their environmental,social and governance market frameworks and,in Kenya,climate risks have been incorporated into financial stability regulation.Greater product diversity has lifted scores for most countries too,including Angola and

52、Lesotho which both issued their first initial public offerings over the past year.The index also recognises the contribution of digital initiatives and innovations to African financial market development.While not directly impacting scores,the report highlights countries progress in upgrading market

53、 infrastructure,transparency and regulation using new technologies.It also sheds a light on various financial inclusion initiatives which help to build a broader domestic investor base.Continued progress on sustainability,digitalisation and financial inclusion will be crucial to improve Africas appe

54、al and access to investors,enabling the continent to develop its resilience to any future external shocks.IntroductionSigns of progress amid external shocksPictured:Tea plantation,RwandaAFMI_INDEX_A4 Template_2022.indd 603/10/2022 15:04:49Score across all pillars,max=100.11South Africa8890Strong per

55、formance but market sell-off and weak growth weigh on score22Mauritius7676Robust financial market but lower reported pension assets33Nigeria6967Better adoption of standard master agreements 46Uganda6660Improved ESG incentives and standards55Botswana6662Strong macroeconomic fundamentals and transpare

56、ncy67Namibia6558Large pension market and new ESG market standards74Ghana6564Weakening macroeconomic environment and reserves810Kenya6155Further progress in sustainable finance98Morocco6056Wide sustainable asset availability and favourable tax system109Egypt5756High market liquidity but economy vulne

57、rable to external shocks1111Tanzania5554First social bond issuance and efforts to liberalise capital controls1212Zambia5452Significant decrease in inflation and improved growth outlook1313Malawi4849Dwindling reserves overshadow better market transparency1415Eswatini4642Improving liquidity and new ES

58、G guidelines1516Seychelles4640Stronger macroeconomic performance and high transparency 16-Zimbabwe44-Better product diversity but weak macroeconomic backdrop1714Rwanda4343High inflation weighs on score1817Cte dIvoire4240Impovement in equity market turnover 1920Angola4037Shares now listed and macroec

59、onomic environment stabilising2019Senegal4038Promising growth outlook,aided by IMF support2118Mozambique3939Falling external debt offset but weaker reserves coverage2221Cameroon3635Decent market transparency but limited market23-DRC35-Working to build nascent market infrastructure24-Madagascar34-Sha

60、llow market but economic data standards improving2522Lesotho3431Equities now available but still small and illiquid market depth2623Ethiopia2727Moving towards a securities exchange and more robust legal frameworkRankCountryScoreComments2022202120222021Absa Africa Financial Markets Index 2022|7 AFMI_

61、INDEX_A4 Template_2022.indd 703/10/2022 15:04:498|Absa Africa Financial Markets Index 2022The Absa Africa Financial Markets Index evaluates the financial development of 26 countries,primarily based on measures of market accessibility,openness and transparency.Scores are determined by the relative,ra

62、ther than absolute,performance of each country across six key pillars:market depth;access to foreign exchange;market transparency,tax and regulatory environment;capacity of local investors;macroeconomic environment and transparency;and legal standards and enforceability.In addition to quantitative d

63、ata analysis,OMFIF conducted surveys of over 50 organisations across Africa to produce the index.This includes responses from central banks,securities exchanges,regulators,market participants,accounting firms and international development organisations.Executive summaryBuilding market infrastructure

64、 during testing timesPictured:Pyramids of Giza,EgyptContinued on p.10 AFMI_INDEX_A4 Template_2022.indd 803/10/2022 15:04:50Absa Africa Financial Markets Index 2022|9 Egypt(57)44 93 79 16 83 25Senegal(40)34 65 41 12 70 15Rwanda(43)30 66 65 14 68 15Cameroon(36)28 52 32 19 71 10Nigeria(69)58 67 85 27 7

65、8 100Ethiopia(27)10 44 30 11 59 10Uganda(66)46 84 81 14 82 90Zambia(54)33 56 74 12 68 80South Africa(88)100 92 93 67 78 100Angola(40)37 62 63 13 53 15Botswana(66)57 71 69 63 84 50Namibia(65)44 62 66 100 74 45Mozambique(39)34 54 44 23 66 15Morocco(60)60 86 81 38 71 25Mauritius(76)60 78 90 63 74 90Tan

66、zania(55)46 64 75 17 76 55Eswatini(46)23 54 57 50 80 10Malawi(48)26 44 63 14 64 80Market depthAccess to foreign exchangeMarket transparency,tax and regulatory environment Capacity of local investorsMacroeconomic environment and transparencyLegal standards and enforceability(xx)=overall scoreKEYCte D

67、Ivoire(42)32 68 50 14 72 15DRC(35)17 42 54 10 76 10Ghana(65)56 68 83 26 63 95Kenya(61)43 82 88 20 74 55Lesotho(34)13 58 31 23 67 10Madagascar(34)16 72 33 10 63 10Seychelles(46)27 64 49 48 76 10Zimbabwe(44)22 47 72 15 67 40AFMI_INDEX_A4 Template_2022.indd 903/10/2022 15:04:5110|Absa Africa Financial

68、Markets Index 2022 South Africa,Mauritius and Nigeria maintain their positions in the top three this year,as they continue to score highly on measures of market depth,transparency and enforceability of legal agreements.Uganda rises two places to fourth,while Namibia and Kenya improve their ranking w

69、ithin the top 10.Scores for these three countries rose due to progress on adopting ESG policies and frameworks.Survey respondents from 11 countries expressed concern over capital flight,rising prices and/or monetary tightening as a result of the Russia-Ukraine war.Ghana has been hit harder than most

70、 by these factors,and the country falls three places in the index to seventh.Pillar 1:Market depth While unfavourable global conditions have decreased the value of market securities across Africa,scores held up well in this pillar.Liquidity has generally improved in the 12 months to June suggesting

71、that,despite higher volatility,markets have been operating fairly smoothly.South Africa continues to lead Pillar 1 given its large market size.Morocco enters the top five,boosted by its leadership in sustainable asset availability.More generally,financial product diversity has improved across Africa

72、,including in Angola and Lesotho which now offer equities on their exchanges.Several countries are using digital technologies to improve market access and information,while initiatives to integrate financial markets across Africa are gathering momentum.This includes the African Exchanges Linkage Pro

73、ject,which nine bourses have joined with the aim of boosting cross-border securities trading.Pillar 2:Access to foreign exchange Scores for Nigeria,Morocco and Uganda improve the most due to their relatively high reported interbank foreign exchange liquidity.FX reserves adequacy,now measured in mont

74、hs of import coverage rather than relative to total portfolio investment flows,has weakened.In recent months,the IMF has provided financing to numerous countries to cushion the blow from external shocks.Pillar 3:Market transparency,tax and regulatory environment Seventeen countries in the index now

75、have sustainability-focused policies five more than last year leading to a broad-based improvement in scores.South Africa,Egypt,Kenya and Mauritius score the maximum on sustainability measures,with climate risk incorporated in their financial stability frameworks.Survey respondents in many countries

76、 flagged issues around the timeliness of financial market reporting alongside shortfalls in audit capacity.Another concern is that tax systems are becoming less conducive to investment in some jurisdictions.Capital gains tax rates have risen in Ghana,Zimbabwe and Egypt and are due to increase in Ken

77、ya.Pillar 4:Capacity of local investors Namibia tops Pillar 4 for the third consecutive year.It continues to have the largest pension holdings per capita in the index,and pension funds are increasingly moving into local assets which helps to foster Namibias domestic market development.Outside of a h

78、andful of southern African economies,most countries have limited pension assets.They are often constrained to investing in government securities,reducing the possible gains from diversification.Meanwhile,several countries are pursuing financial inclusion initiatives,including financial education pro

79、grammes,mentorship and mobile apps for facilitating online trading.Continued progress on this front will lead to increased access and participation in local markets.Pillar 5:Macroeconomic environment and transparency Botswana rises to the top of Pillar 5,ahead of Egypt,owing to its low external debt

80、,small share of non-performing loans and transparent data releases.Elsewhere,scores generally fell as inflation,which is now included in Pillar 5,has risen.Debt issues have become more acute in parts of Africa,with eight index countries at high risk of,or in,debt distress according to the IMF.Pillar

81、 6:Legal standards and enforceability Alongside South Africa,Nigeria scores highest in Pillar 6 due to wider use of standard master agreements following legislative reforms in 2020.Improvements in enforceability have prompted higher use of some master agreements in Ghana.Other countries including Ug

82、anda,Ethiopia and Rwanda are undertaking projects to improve the adoption of international standards and the enforceability of close-out netting provisions.The report finds that:AFMI_INDEX_A4 Template_2022.indd 1003/10/2022 15:04:52Absa Africa Financial Markets Index 2022|11 Overall pillar scores ma

83、x=100 Pillar 6:Legal standards and enforceabilityPillar 1:Market depthPillar 2:Access to foreign exchangePillar 3:Market transparency,tax and regulatory environment Pillar 4:Capacity of local investorsPillar 5:Macroeconomic environment and transparencyNigeria100South Africa100Ghana95Mauritius90Ugand

84、a90Malawi80Zambia80Kenya55Tanzania55Botswana50Namibia45Zimbabwe40Egypt25Morocco25Angola15Cte dIvoire15Mozambique15Rwanda15Senegal15Cameroon10DRC10Eswatini10Ethiopia10Lesotho10Madagascar10Seychelles10South Africa93Mauritius90Kenya88Nigeria85Ghana83Uganda81Morocco81Egypt79Tanzania75Zambia74Zimbabwe72B

85、otswana69Namibia66Rwanda65Malawi63Angola63Eswatini57DRC54Cte dIvoire50Seychelles49Mozambique44Senegal41Madagascar33Cameroon32Lesotho31Ethiopia30South Africa100Morocco60Mauritius60Nigeria58Botswana57Ghana56Uganda46Tanzania46Egypt44Namibia44Kenya43Angola37Mozambique34Senegal34Zambia33Cte dIvoire-32Rwa

86、nda30Cameroon28Seychelles27Malawi26Eswatini23Zimbabwe22DRC17Madagascar16Lesotho13Ethiopia10Egypt93South Africa92Morocco86Uganda84Kenya82Mauritius78Madagascar72Botswana71Cte dIvoire68Ghana68Nigeria67Rwanda66Senegal65Tanzania64Seychelles64Namibia62Angola62Lesotho58Zambia56Mozambique54Eswatini54Cameroo

87、n52Zimbabwe47Ethiopia44Malawi44DRC42Namibia100South Africa67Mauritius63Botswana63Eswatini50Seychelles48Morocco38Nigeria27Ghana26Lesotho23Mozambique23Kenya20Cameroon19Tanzania17Egypt16Zimbabwe15Uganda14Rwanda14Cte dIvoire14Malawi14Angola13Senegal12Zambia12Ethiopia11Madagascar10DRC10Botswana84Egypt83U

88、ganda82Eswatini80Nigeria78South Africa78Tanzania76DRC76Seychelles76Mauritius74Kenya74Namibia74Cte dIvoire72Cameroon71Morocco71Senegal70Rwanda68Zambia68Zimbabwe67Lesotho67Mozambique66Malawi64Madagascar63Ghana63Ethiopia59Angola53AFMI_INDEX_A4 Template_2022.indd 1103/10/2022 15:04:5212|Absa Africa Fina

89、ncial Markets Index 2022Ethiopias Ministry of Finance signed a co-operation agreement to establish the Ethiopian Securities Exchange.Banco Angolano de Investimentos issued the fi rst initial public offering on Angolas stock exchange.The$150m listing of MTC was the largest capital raising on Namibias

90、 stock exchange,and the fi rst by a state-owned enterprise.The Central Bank of Congo is partnering with the African Development Bank to improve market information systems and issue commercial papers.The Lusaka Securities Exchange unveiled the LuSE Gem Portal,a digital platform designed to provide fi

91、 nancing to Zambian small-and medium-sized enterprises.Bourse Rgionale des Valeurs Mobilires signed a memorandum of understanding with the Luxembourg Stock Exchange to explore a market for GSS-linked bonds.Egypt joined JP Morgan indices for emerging market government bonds.The Eswatini Stock Exchang

92、e issued an environmental,social and governance reporting guide for listed companies.Cameroons government implemented the National Digital Payment Switch Infrastructure which will connect digital fi nancial service providers.The Botswana Stock Exchange and Ghana Stock Exchange joined the original se

93、ven bourses in the African Exchanges Linkage Project to facilitate greater cross-border trading.NMB Bank Tanzania listed the Jasiri bond on the Dar es Salaam Stock Exchange,the fi rst gender bond in sub-Saharan Africa.Highlights 2021-22Mauritius launched the pan-African securities exchange,Afrinex.A

94、FMI_INDEX_A4 Template_2022.indd 1203/10/2022 15:04:53Absa Africa Financial Markets Index 2022|13 Market developments and policy changes boost growth of fi nancial markets across the continentBolsa de Valores de Moambique now has an online platform and a mobile application facilitating access to mark

95、et data.The Central Bank of Nigeria introduced its central bank digital currency,the eNaira.The Bank of Uganda launched a strategic plan for 2022-27 which considers CBDCs,fi nancial sustainability and big data.The Malawi Stock Exchange is in the process of enabling trading using a mobile phone.Ghana

96、Pay,a mobile money service,was launched as part of Ghanas National Financial Inclusion Agenda.The Central Bank of Kenya issued guidance for banks to incorporate climate-related factors into their risk management frameworks.Rwanda is working with the International Finance Corporation and Frontclear t

97、o introduce GMRA,GMSLA and market makers to their fi nancial system.Zimbabwes Stock Exchange introduced four new exchange-traded funds in 2022.The IMF is providing technical assistance to Seychelles to develop a secondary market for government securities.RNB Properties Limited became the fi rst list

98、ed company on the Maseru Securities Market in Lesotho.Bank Al-Maghrib in Morocco is working to establish an overnight indexed swap curve to help investors hedge against interest rate risks.The Cape Town Stock Exchange became the second bourse in South Africa to offer equity and debt trading.AFMI_IND

99、EX_A4 Template_2022.indd 1303/10/2022 15:04:55Pillar 1:Market depthPictured:Copper mine,Zambia14|Absa Africa Financial Markets Index 2022AFMI_INDEX_A4 Template_2022.indd 1403/10/2022 15:04:57Absa Africa Financial Markets Index 2022|15 Figure 1.1:South African markets hit hard by global pressures but

100、 still ahead of regional peersContributing indicators and overall harmonised scores for Pillar 1,max=1000102030405060708090100South AfricaMoroccoMauritiusNigeriaBotswanaGhanaUgandaTanzaniaEgyptNamibiaKenyaAngolaMozambiqueSenegalZambiaCte dIvoireRwandaCameroonSeychellesMalawiEswatiniZimbabweDRCMadaga

101、scarLesothoEthiopiaSize of marketLiquidityProduct diversityDepthPrimary dealer systemPillar 1 score2021 Pillar 1 scoreSource:AFMI survey 2022,national central banks,national stock exchanges,national capital market authorities,IMF,World Federation of Exchanges,OMFIF analysisNote:The overall Pillar 1

102、score represents the average harmonised score across all Pillar 1 indicators.Scores from 2021 are updated to incorporate any revisions,newly available data and/or improved data collection methods and may not reflect the Pillar 1 scores published in AFMI 2021.More information on pp.42.3.Unfavourable

103、global conditions have weighed on the size of most financial markets,but liquidity has generally improved in the 12 months to June.Improving financial product diversity lifts Morocco into the top five,while Ghana drops out owing to a sell-off in listed government bonds.Most countries continue to dev

104、elop their market infrastructure and depth,often using digital technologies.Pillar 1 evaluates the size and liquidity of domestic capital markets,along with the diversity of listed asset classes and the existence of standard features that enhance market depth.AFMI_INDEX_A4 Template_2022.indd 1503/10

105、/2022 15:04:5816|Absa Africa Financial Markets Index 2022Stock markets under pressure while liquidity improvesAfrica has not been immune to the instability seen in global financial markets this year.Numerous survey respondents mentioned concerns over investor flight owing to external factors,includi

106、ng the Russia-Ukraine war,the global monetary tightening cycle and stagflation fears.These factors have increased the volatility,and decreased the value,of market securities in Africa.The depreciation of most African currencies this year has exacerbated the sell-off in dollar terms.Equities have bee

107、n hit particularly hard.In the 12 months to June,$210bn was wiped from the market capitalisation of the 26 countries in our index.That equates to a 13%year-on-year fall.Declines were broad-based across the region.In dollar terms,the sharpest drops came in Zimbabwe(63%),Kenya(34%)and Seychelles(25%).

108、South Africas equity market also fell but it remains the largest on the continent,and the country continues to score highest in Pillar 1 overall(Figure 1.2).Not all were swept up in the global stock market turmoil.In dollar terms,market capitalisation rose in seven countries,including Nigeria,Zambia

109、 and Namibia.In the latter,this was helped by the listing of Mobile Telecommunications Limited in November 2021 which raised over$150m.This is the largest capital raising on Namibias stock exchange to date and was the first local listing of a state-owned enterprise.Encouragingly,Angola and Lesotho s

110、aw the first initial public offerings on their exchanges in the past year.In June 2022,the Banco Angolano de Investimentos floated 10%of its shares on Angolas Debt and Stock Exchange(Bodiva).Six months prior to this,RNB Properties Limited listed shares on the Masuru Securities Market.In both cases,m

111、arket capitalisation is still small at less than 2%of GDP,compared to an average of 35%of GDP across all AFMI countries.One survey respondent in Lesotho hopes that some state-owned enterprises will list shares to drive a corporate bond markets across AFMI countries fell by roughly 25%year-on-year.Th

112、e drop was especially pronounced in Seychelles,where the value of listed corporate bonds fell to just$5m in June 2022,from$246m a year earlier.One local participant explained that the sharp decline is due to the delisting of two corporate bonds in March of this year.There were also large falls in th

113、e value of corporate bonds in South Africa(33%),Figure 1.2:Declines in market capitalisationfurther expansion of the stock market there.Despite the unfavourable global conditions,stock market liquidity has not dried up.In fact,in the 12 months to June,the turnover of equity markets improved in 14 co

114、untries in the index compared to a year earlier.This partly reflects the normalisation of trading after it had been adversely impacted by the outbreak and various waves of Covid-19.As a share of market capitalisation,equity turnover returned to its pre-pandemic level in South Africa,Morocco and Keny

115、a.(Figure 1.3.)Overall,despite greater selling activity and volatility,equity markets have been operating fairly smoothly across the region.Mixed picture in fixed-income marketsSimilar to equities,corporate bonds have been caught in the crossfire of global market pressures.In dollar terms,the total

116、size of domestic Sources:AFMI survey 2022,national stock exchanges,IMF,WFE,OMFIF analysisMarket capitalisation,%of GDP 050100150200250300350400South AfricaBotswanaSeychellesMauritiusMoroccoSenegalRwandaZimbabweMalawiZambiaNamibiaNigeriaKenyaUgandaCte dIvoireGhanaTanzaniaEgyptEswatiniMozambiqueAngola

117、LesothoCameroonDRCEthiopiaMadagascarJune 2021June 2022In the 12 months to June,$210bn was wiped from the market capitalisation of the 26 countries in our index.That equates to a 13%year-on-year fall.AFMI_INDEX_A4 Template_2022.indd 1603/10/2022 15:04:58Absa Africa Financial Markets Index 2022|17 Mal

118、awi(23%)and Botswana(22%).By contrast,in dollar terms,the total size of listed sovereign bonds for index countries has risen by 5%year-on-year.In the face of tighter global financial conditions,which has dissuaded issuance on international markets,many governments have been increasingly reliant on r

119、aising debt on domestic markets.Note that while larger bond markets are given higher scores in Pillar 1,the adverse impact of rising public debt is considered in Pillar 5.Ghana was an exception to this general trend.Continued domestic government bond issuance was more than offset by adverse valuatio

120、n effects.Investor concerns over the fiscal position,high inflation and tighter monetary policy caused the value of its listed government bonds to fall over the past year to 25.3%of GDP,from 35.8%.This a key reason why Ghana slips three places to sixth in Pillar 1.On the plus side,the turnover of Gh

121、anas listed sovereign bonds has picked up by 12%year-on-year.One local survey respondent noted that this was due to an increase in pension funds participation and the capital adequacy ratio requirement of banks.There was also a notable rise in Egypts sovereign bond turnover,which almost doubled to$4

122、6bn in the 12 months to June.Inflows to the local debt market have risen after the country was added to the JP Morgan index for emerging market bonds in January.Egypt climbs one place to ninth in Pillar 1.Its overall score remains constrained by the limited size and activity in the corporate bond ma

123、rket.Enhancing market diversityPolicy-makers have taken steps to develop their capital markets over the past year.Improving financial product diversity has been a key focus.Regulators in Nigeria granted the approval of the first derivatives contracts in the country,paving the way for the Nigerian Ex

124、change Limited to launch the first exchange-traded derivatives market in West Africa earlier this year.Elsewhere,Figure 1.3:Equity turnover recovers to pre-pandemic level in South Africa,Morocco and KenyaTotal equity turnover,%of market capitalisationSource:National central banks,national stock exch

125、anges,national capital market authorities,WFE,OMFIF analysis0510152520303540455055EgyptSouth AfricaNamibiaMoroccoAngolaKenyaNigeriaZimbabweMauritiusZambiaCte dIvoireSenegalGhanaEswatiniMalawiTanzaniaBotswanaCameroonMozambiqueRwandaUgandaLesothoSeychellesDRCEthiopiaMadagascarJuly 2020-June 2021July 2

126、021-June 2022Pre-pandemic average*Average from July 2017-June 2019Zimbabwes Stock Exchange introduced four new exchange-traded funds in 2022.This included The Morgan&Co Multi-Sector ETF,the first actively managed ETF in the country.In general,ETFs enable diversification,often at low cost,which can b

127、e useful to investors during periods of high market volatility.One survey respondent in Kenya noted that the challenges presented by the effects of Covid-19 and the conflict between Russia and Ukraine have facilitated a shift of investor preferences towards securities like ETFs.Almost half of AFMI c

128、ountries offer ETFs on their exchanges,which suggests there is further scope to improve market diversity and resilience in Africa.Since last year,we have also considered the availability of sustainable products in Pillar 1 given its growing importance in global financial markets.ESG-linked assets ar

129、e still relatively scarce across the continent but they are becoming more widespread.Nine countries in the index now offer sustainable products,with Tanzania joining the list this year.NMB Bank Tanzania listed the Jasiri bond,the first gender bond in sub-Saharan Africa,on the Dar es Salaam Stock Exc

130、hange in April.Morocco scores highest on this indicator as it continues to deepen its sustainable financial product offerings.There were already green or sustainable bonds,equities and mutual funds available in Morocco last year.Since then,one local survey respondent noted the successful issuance of

131、 a gender bond in December 2021 and a green bond in July 2022,with a total approximate amount of$120m.Moroccos leadership in sustainable finance helps the country to enter the top five in Pillar 1 this year.While offering sustainable financial products is an important first step,there are reasons fo

132、r caution.One survey participant in Kenya AFMI_INDEX_A4 Template_2022.indd 1703/10/2022 15:04:58further steps to develop capital markets.Kenyas Capital Markets Authority developed a policy framework on cryptoassets and tokenised securities.Nigerias Securities and Exchange Commission issued rules on

133、the regulation of digital assets such as cryptocurrencies and initial coin offerings.Financial Services Mauritius has released a framework regulating virtual assets service providers and initial token offerings,and rules on robotic and AI advisory services.Central bank digital currencies More centra

134、l banks have begun to explore the possibility of issuing CBDCs,which could promote access to the digital economy,and improve the resilience of payments systems with new infrastructure.The Central Bank of Nigeria launched the eNaira in October 2021 which has since been used to carry out transactions

135、worth almost$10m.In its next phase,CBN seeks to have more citizens open an eNaira wallet using their mobile phones.The Bank of Ghana is working on developing offline usability for its CBDC,e-Cedi,to ensure access to all segments of society.The Central Bank of Kenya issued a discussion paper for publ

136、ic comment to examine the applicability of a CBDC.The South African Reserve Bank is now in the second phase of its CBDC project,Project Khokha,which will inform policy and regulatory responses to CBDCs.Central banks in Morocco,Uganda,Rwanda,Tanzania,Zambia,Madagascar and Namibia have announced that

137、they are exploring the viability of a CBDC.Digital developments in finance Continued progress on digitalisation is making financial markets more accessible,which should help to boost competition and efficiency.Digital trading initiatives Digital technologies are being used to improve market informat

138、ion and accessibility,making capital markets more attractive to investors and issuers.Mozambiques stock exchange(Bolsa de Valores de Moambique)introduced the Dashboard,a statistical panel that assists with interpreting market data.The Johannesburg Stock Exchange introduced an equity market data anal

139、ytics platform as well as ShareHub,an interface that enables issuers to communicate to their shareholders.The Uganda Securities Exchange now has a digital platform for opening securities accounts.The Nairobi Securities Exchange has installed an electronic trading system for securities transactions a

140、nd an exchange-traded products system.The Stock Exchange of Mauritius has a new automated trading system,Avento.This provides investors with real-time market monitoring and will assist the Financial Services Commission in monitoring irregular trading activities.A few banks in Morocco have implemente

141、d artificial intelligence robo-advisers to provide algorithm-based financial planning services.The Nigerian Securities and Exchange Commission has introduced a regulatory framework for robo-advisory services.Ugandan sovereign bonds are now priced on Bloombergs evaluated pricing service,BVAL.Botswana

142、 is rolling out the Bloomberg e-bond platform for secondary trading,aiming for full inclusion of key market players,greater pricing transparency and higher liquidity.Digital finance regulationLegislation regulating digital assets provides 18|Absa Africa Financial Markets Index 2022AFMI_INDEX_A4 Temp

143、late_2022.indd 1803/10/2022 15:04:58Absa Africa Financial Markets Index 2022|19 shared concerns over a shortage of opportunities within the green investment space locally so investing in green assets could involve taking a discount,reducing its appeal.As a result,to further develop financial markets

144、,it is important to incentivise sustainable product issuance and provide a framework to make these assets attractive to investors.These factors are considered in more detail in Pillar 3.Integration and partnershipsInitiatives to integrate financial markets across Africa are gathering momentum.In gen

145、eral,they aim to widen the available investor base,support diversification and boost liquidity of markets.One key milestone came in Mauritius.It launched the new pan-African securities exchange,Afrinex,in October 2021.One survey respondent noted that Afrinex provides the opportunity to operate equit

146、y,fixed income and derivatives across asset classes and serves as the first pan-African exchange in Mauritius with a global reach.Otherwise,central banks in the East African Community are continuing to work towards harmonising their financial markets.One survey respondent from the bloc mentioned pla

147、ns such as linking central security depositories as well as enabling cross-border trading of government securities.Another important initiative which is making progress is the African Exchanges Linkage Project.This is organised by the African Securities Exchanges Association and the African Developm

148、ent Bank with the aim of facilitating intra-regional securities trading.Four of the original seven bourses in the project(Bourse Rgionale des Valeurs Mobilires,the Casablanca Stock Exchange,the Egyptian Exchange and the Nigerian Exchange)have now connected to the common order routing system,and nume

149、rous stockbrokers have confirmed their participation in a pilot phase.More recently,the Botswana Stock Exchange and Ghana Stock Exchange joined the project.Finally,policy-makers in countries with nascent financial markets are liaising with other organisations to build their market infrastructure.A s

150、urvey respondent in the Democratic Republic of the Congo mentioned that the authorities are working with the African Development Bank to broaden the financial system,strengthen information sharing systems,and help with the first issuance of commercial papers.In May 2022,Ethiopias ministry of finance

151、 signed an agreement with the Ethiopian Investment Holdings(the countrys sovereign fund)and FSD Africa to establish the Ethiopian Securities Exchange.Once formed,this will be the 30th exchange in Africa.Nine countries in the index now offer sustainable products,with Tanzania joining the list this ye

152、ar.Source:AFMI survey 2022CountryEquitiesGovernment bondsCorporate bondsETFsGreen bondsOther sustainable bondsMauritiusSouth AfricaGhanaKenyaNamibiaNigeriaEgyptTanzaniaUgandaBotswanaZimbabweAngolaMoroccoCte dIvoireSenegalEswatiniRwandaCameroonMozambiqueZambiaMalawiLesothoSeychellesDRCMadagascarFigur

153、e 1.4:Fewer than half of countries offer ETFs or sustainable financial productsAvailability of selected financial market products on exchanges or OTCAFMI_INDEX_A4 Template_2022.indd 1903/10/2022 15:04:58Pillar 2:Access to foreign exchangePictured:Namib-Naukluft National Park,Namibia20|Absa Africa Fi

154、nancial Markets Index 2022AFMI_INDEX_A4 Template_2022.indd 2003/10/2022 15:05:00Absa Africa Financial Markets Index 2022|21 Source:AFMI survey 2022,IMF,national central banks,OMFIF analysisNote:The overall Pillar 2 score represents the average harmonised score across all Pillar 2 indicators.Scores f

155、rom 2021 are updated to incorporate any revisions,newly available data and/or improved data collection methods.They are adjusted to be consistent with the current methodology,with the measure of reserves adequacy changed to months of import coverage,rather than relative to net portfolio flows.More i

156、nformation on pp.42-3.Figure 2.1:Lower reserves coverage weighs on scores,particularly for MalawiContributing indicators and overall harmonised scores for Pillar 2,max=100 0102030405060708090100EgyptSouth AfricaMoroccoUgandaKenyaMauritiusMadagascarBotswanaCte dIvoireGhanaNigeriaRwandaSenegalTanzania

157、SeychellesNamibiaAngolaLesothoZambiaMozambiqueEswatiniCameroonZimbabweEthiopiaMalawiDRCReserves adequacyFX liquidityFX arrangement and controlsReporting standardsPillar 2 score2021 Pillar 2 scoreRelatively high interbank FX liquidity boosts scores for Morocco,Nigeria and Uganda.FX reserves adequacy

158、has weakened relative to the previous year,particularly in Malawi.The International Monetary Fund has provided financing to 10 index countries so far in 2022 to cushion the blow from external shocks.Pillar 2 considers the openness of markets to foreign investment.It looks at the severity of capital

159、controls,interbank foreign exchange liquidity and reporting standards of exchange rate data.It also assesses the ability of central banks to manage volatility from foreign capital flows by considering the adequacy of FX reserves.AFMI_INDEX_A4 Template_2022.indd 2103/10/2022 15:05:0122|Absa Africa Fi

160、nancial Markets Index 2022Providing a greater flow of foreign exchange through interbank markets provides many benefits.It ensures easy access to foreign currencies and allows for more accurate pass-through of official exchange rates to the domestic economy.South Africa and Egypt continue to score h

161、ighest on this metric and remain in the top two for Pillar 2.Meanwhile,the score for interbank FX liquidity rose significantly in Uganda,Morocco and Nigeria this year.In Uganda,annual turnover rose to$28.4bn,from$21.5bn the year before.At$25.7bn and$16.5bn,respectively,these values for Morocco and N

162、igeria were significantly higher than they were before the pandemic.Kenya also reported higher interbank FX turnover this year,which boosts its Pillar 2 score.Liquidity is much weaker,or negligible,in most other countries in the index.In contrast,all countries score highly on reporting standards for

163、 FX markets.Daily exchange rate data are published on central bank and/or securities exchange websites across the continent,albeit with a few days lag in some instances.Transparency could be improved through greater compliance with the FX Global Code a set of best practice principles for the FX mark

164、et.According to survey responses,there is only widespread adoption of the FX Global Code in Egypt,South Africa and Mauritius.Tanzania is planning to adopt the code later this fiscal year,while a survey respondent in Uganda mentioned that they would be open transactions,one survey participant noted t

165、his has now been rescinded with the government announcing that the use of multiple currencies will continue for the next five years.The central bank has imposed stringent capital controls too,as it plays a key role in allocating FX to finance certain imports over others.These restrictions and runawa

166、y inflation have caused a large premium to emerge in informal exchange rate markets,accentuating the difficulties for local business and households to access FX.There are similar trends in Nigeria given its relatively strict capital controls and multiple exchange rate system,contributing to its low

167、score on this measure in Pillar 2.Reserves running low as IMF steps up supportBeing open to foreign capital can unlock greater investment opportunities,but it also comes with risks.As evidenced this year,it can leave economies vulnerable to sudden capital outflows.Having a sizeable pool of FX reserv

168、es is necessary to protect against external shocks and can be used to stem volatility in FX markets.For the 2022 AFMI,the way we measure FX reserves adequacy has been changed,with the index now using months of import coverage,using annual data from the IMF,rather than reserves relative to net portfo

169、lio flows.This is a more standardised and robust measure which considers how long an economy can sustain itself if all other capital flows cease.Aggregate FX reserves in index countries rose by 9%in 2021 relative to following this path.Last year,Mauritius took a further step towards improving its tr

170、ansparency.The Mauritius Bankers Association Limited became the first organisation in Africa to be added to the Global Foreign Exchange Committees list of participating public registers.This provides a centralised location for Mauritian banks to publicise their commitment to the FX Global Code.One s

171、urvey respondent from the country stated that this will help in promoting the integrity and effective functioning of the Mauritian wholesale FX market on the international front.Varying stringency of capital controlsMeanwhile,Mauritius continues to score the maximum on its FX arrangement and control

172、s owing to its relaxed capital restrictions.Authorities in Morocco have eased some capital controls,helping the country to enter the top three on Pillar 2.Moroccos Foreign Exchange Office issued a general instruction on FX operations at the start of the year which continues the process of liberalisi

173、ng FX regulation and consolidating the exchange regime convertibility,as stated by a local survey participant.This included an increase in the authorised ceiling on Moroccans investing abroad,as well as a higher limit on domestic firms accessing FX to pay for imports.Tanzania has also moved to liber

174、alise its capital account.The Foreign Exchange Regulation Act 2022 opened up access to foreign investors in the domestic debt market.This included allowing investors from Southern African Development Community member states to participate in the government bonds market at the primary market level,as

175、 explained by one Tanzanian survey respondent.The new regulations also give domestic residents easier access to regional financial markets to diversify their investment portfolios.On the other end of the spectrum,Zimbabwe scores poorly on its FX arrangement and controls.While reforms in 2019 made th

176、e Zimbabwe dollar the only official currency for The IMF has provided financial assistance worth over$1.6bn across 10 index countries this year.In recent months,Malawi,Ghana and Egypt have all approached the IMF for financing to rebuild their reserves and stabilise their economies.AFMI_INDEX_A4 Temp

177、late_2022.indd 2203/10/2022 15:05:01Absa Africa Financial Markets Index 2022|23 to 2020,boosted by a general IMF special drawing rights allocation in August 2021.This disbursement was set relative to each countrys IMF quota and added a total of$23.7bn across all index countries.Despite a rise in FX

178、reserves in almost all index countries,coverage relative to imports generally deteriorated in 2021.This was due to a proportionally larger increase in imports from the pandemic-induced lows.South Africas reserves coverage fell to 5.1 months of imports in 2021,from 6.4 in 2020,which contributed to th

179、e country slipping to second place in Pillar 2 behind Egypt,which experienced a shallower fall in reserves coverage last year.Worse still,Malawis reserves coverage dropped to just 0.5 months of imports,from 2.0 in 2022,which was the lowest ratio among index countries.This weighed significantly on th

180、e countrys score,causing Malawi to slip to the penultimate place in Pillar 2.As a result,heading into this year,Malawi was more vulnerable than most to the external shocks of high commodity prices and tighter financial conditions.Faced with these pressures,and with few buffers to defend the currency

181、,the Malawian kwacha was devalued by 25%in May 2022.Ghana and Egypt have also seen their currencies hit hard from the spillovers of the Russia-Ukraine war and their FX reserves dropped by more than 20%in the first half of this year.In recent months,Malawi,Ghana and Egypt have all approached the IMF

182、for financing to rebuild their reserves and stabilise their economies.Mozambique,Tanzania and Zambia have already agreed new credit facilities with the Fund this year.Seven other countries have received IMF financing in 2022,which came as part of existing deals negotiated during the pandemic.Overall

183、,the IMF has provided financial assistance worth over$1.6bn across 10 index countries this year.This will help vulnerable economies to meet their external financing needs in the near term.But domestic reforms will be required to ease balance of payments and/or debt vulnerabilities to ensure greater

184、access to foreign capital further down the line.All countries score highly on reporting standards for FX markets.Daily exchange rate data are published on central bank and/or securities exchange websites across the continent,albeit with a few days lag in some instances.Figure 2.2:Reserves coverage h

185、as generally deterioratedTotal FX reserves in months of importsSource:IMF,OMFIF analysis0246810121416MauritiusAngolaBotswanaMoroccoNigeriaCte dIvoireSenegalMadagascarNamibiaSouth AfricaTanzaniaEgyptRwandaSeychellesKenyaLesothoUgandaGhanaEswatiniCameroonZambiaMozambiqueEthiopiaZimbabweDRCMalawi202020

186、21AFMI_INDEX_A4 Template_2022.indd 2303/10/2022 15:05:01Pillar 3:Market transparency,tax and regulatory environmentPictured:Boat in the sea in Mombasa,Kenya24|Absa Africa Financial Markets Index 2022AFMI_INDEX_A4 Template_2022.indd 2403/10/2022 15:05:03Absa Africa Financial Markets Index 2022|25 Sou

187、rces:AFMI 2022 survey,BIS,IFRS,Deloitte International Accounting Standards Plus,Refinitiv,GCR Ratings,OMFIF analysisNote:The overall Pillar 3 score represents the average harmonised score across all Pillar 3 indicators.Scores from 2021 are updated to incorporate any revisions,newly available data an

188、d/or improved data collection methods and may not reflect those published in AFMI 2021.More information on pp.42-3.Figure 3.1:Progress on ESG incentives takes South Africa,Kenya and Mau-ritius above NigeriaContributing indicators and overall harmonised scores for Pillar 3,max=10001020304050607080901

189、00South AfricaMauritiusKenyaNigeriaGhanaUgandaMoroccoEgyptTanzaniaZambiaZimbabweBotswanaNamibiaRwandaMalawiAngolaEswatiniDRCCte dIvoireSeychellesMozambiqueSenegalMadagascarCameroonLesothoEthiopiaFinancial stability regulationReporting and accounting standardsTax environmentFinancial information tran

190、sparencyMarket development policiesESG initiatives and standardsExistence of credit ratingPillar 3 score2021 Pillar 3 scoreBroad-based progress on ESG policies and frameworks lifts scores for most countries.In many jurisdictions,transparent financial reporting is limited by local accounting and audi

191、t capacity.Tax environments are becoming less conducive to investment in some countries.Pillar 3 examines the transparency of financial markets alongside the tax and regulatory environments,each of which fosters local and foreign investor confidence.Environmental,social and governance indicators are

192、 also considered to assess sustainable market development.AFMI_INDEX_A4 Template_2022.indd 2503/10/2022 15:05:0326|Absa Africa Financial Markets Index 2022ESG policies becoming more widespreadESG assets are gaining in importance for global investors,making it important for African countries to provi

193、de a conducive environment for these products.To that end,last year we introduced indicators on ESG policies that incentivise the development and transparency of sustainable fi nancial markets to Pillar 3.We also incorporated climate stress testing as part of the fi nancial stability indicators.Enco

194、uragingly,17 countries in the index now have sustainability-focused fi nancial policies,compared to 12 last year.Uganda and Namibia were among the strongest risers on these ESG indicators,climbing by six and seven places in Pillar 3,respectively.In Uganda,the central bank launched a strategic plan f

195、or 2022-27 which includes new goals such as the promotion of a sustainable fi nancial system,whereby fi nancial institutions are encouraged to meet ESG standards.Earlier this year,the Namibian Stock Exchange issued a directive for subscribers to the NamCode(a guide of best practice principles that p

196、rimary-listed companies must follow)to appoint a social,ethics and sustainability committee.South Africa is one of the four countries to score the maximum on these ESG criteria in Pillar 3.In June 2022,the Johannesburg Stock Exchange issued its Sustainability Disclosure Guidance.One local respondent

197、 explained that this best practice guide makes it easy to understand how the various global frameworks stack together and how issuers could consider these.The JSE also issued the Climate Change Disclosure Guidance which includes Task Force on Climate-related Financial Disclosures recommendations.Sou

198、th Africas Treasury introduced a green fi nance taxonomy to defi ne green assets in line with international best practice.These developments helped to push South Africa to the top of Pillar 3 this year.Mauritius and Kenya also score the maximum on sustainability indicators,and they move ahead of Nig

199、eria into the top three in Pillar 3.Central banks in both countries issued requirements for fi nancial institutions to incorporate climate-related factors into their risk management frameworks,and banks must report their progress on implementing these guidelines over the coming quarters.Egypt is the

200、 fourth country to score the most on its ESG policies.As of mid-2021,listed companies were obligated to fulfi l the disclosures related to ESG practices and climate change under the TCFD.One survey respondent mentioned that the authorities are also working to amend Source:AFMI survey 2022Note:Countr

201、ies not included are Cameroon,Cte dIvoire,DRC,Ethiopia,Lesotho,Madagascar,Mozambique,Senegal and SeychellesClimate stress testingIncentives for issuing ESG assetsIncentives for ESG market standardsEgyptKenyaMauritiusSouth AfricaGhanaMoroccoNamibiaNigeriaTanzaniaUgandaZambiaZimbabweRwandaAngolaBotswa

202、naEswatiniMalawiFigure 3.2:Most AFMI countries now implement ESG-related fi nancial policiesExistence of sustainability-focused policiesEncouragingly,17 countries in the index now have sustainability-focused fi nancial policies,compared to 12 last year.AFMI_INDEX_A4 Template_2022.indd 2603/10/2022 1

203、5:05:04Absa Africa Financial Markets Index 2022|27 the Egyptian Capital Market Law to create new types of bonds,including sustainability-linked and social bonds.Tax systems incentivising investmentWhile ESG factors are gaining importance,there are other major factors which incentivise investment.Tax

204、 systems are a crucial element.Mauritius scores highest on the favourability of its tax regime,closely followed by Morocco.These two countries have low withholding tax rates on interest and dividends(the latter is zero in Mauritius).They each have over 40 double taxation treaties too,which offer exe

205、mptions to foreign investors and therefore incentivise greater portfolio inflows.Elsewhere,the authorities in Ghana signed a tax treaty with Luxembourg in late 2021 which has yet to come into force.One survey participant stated that Ghana is also negotiating tax deals with Iran and Turkey.Despite th

206、e progress on this front,Ghanas tax regime is becoming less favourable to investors.The government introduced an E-levy which adds a 1.5%tax on all electronic transactions above 100 Ghanian cedi.Moreover,tax exemption on capital gains for securities listed on the Ghana Stock Exchange ended in 2021.I

207、t is a similar story elsewhere.A 10%capital gains tax on Egyptian Stock Exchange transactions was introduced at the start of this year,and CGT rates were increased in Zimbabwe in late 2021 and again in May 2022.In Kenya,the Finance Act of 2022 increases the rate of CGT from 5%to 15%,which will take

208、effect from 1 January 2023.These policies may help governments to address their fiscal positions,but it could come at the cost of stunting the development of their capital markets.Challenges for financial reportingTransparency and the availability of financial information is useful to underpin inves

209、tor confidence in a jurisdiction.Countries in the index generally score highly on this measure.The vast majority offer data on the domestic and foreign ownership of financial assets and all AFMI countries have fixed times for financial reporting.International Financial Reporting Standards have been

210、widely adopted too,albeit there are exceptions in Egypt,Ethiopia and Seychelles.However,small-and medium-sized enterprises can fall through the cracks in adopting IFRS.For instance,a survey respondent in Uganda noted that SMEs may fail to adhere to accounting standards as the cost of financial repor

211、ting and compliance can prove prohibitive,while another in Madagascar mentioned that small companies are not audited.Broader concerns over audit capacity were raised elsewhere.A respondent in Seychelles noted the lack of experience and expertise of auditors as a limitation,while another in Ghana sta

212、ted that a lack of strong oversight on the work of auditors can hinder reporting.These concerns were echoed by a major accountancy firm in Nigeria,which mentioned that the quality of audit is still below par and impacts on the confidence that can be placed on financial statements.Separately,challeng

213、es surrounding timeliness and consistency of reporting were mentioned by survey participants in Botswana,Democratic Republic of the Congo,Eswatini,Zambia and Zimbabwe.Credit ratings picking upAnother key element of market transparency is credit ratings.They can give useful insights to investors on t

214、he risks associated with sovereign or corporate debt issuers.Malawi and Zimbabwe score poorly on this measure,as neither country has a sovereign credit rating by any of the three major ratings agencies(S&P,Moodys and Fitch).For corporates,the availability of ratings by these agencies is generally sc

215、arce across AFMI countries.The main exceptions are South Africa(88)and Nigeria(40),where ratings rose by 22 and seven respectively relative to last year.International corporate ratings fell to 21 in Mauritius,down by seven,and there are fewer than 12 ratings in all other AFMI countries.Local and reg

216、ional agencies help to provide coverage on corporate credit ratings.The total number of ratings by GCR,a Johannesburg-based agency,for AFMI countries rose significantly to 597,from 487 a year before.At country level,there were double-digit increases in South Africa,Nigeria,Mauritius and Kenya.Moreov

217、er,the first GCR rating for an Ethiopian firm came in December 2021,for the insurance company Ethio Re.However,there is a lot of room for improvement.Ten AFMI countries received two or fewer corporate ratings from GCR,with none at all in the DRC,Lesotho and Seychelles.International ratingsRegional(G

218、CR)ratingsCountry2021202220212022South Africa6688219245Nigeria3340141180Mauritius2821425Morocco131100Egypt71022Kenya863752Angola5600Namibia5599Ghana34109Uganda3376Botswana3155Rwanda1154Zambia0124Cameroon1111Cte dIvoire0121Senegal1101Zimbabwe002835Tanzania20109Mozambique0024Malawi0012Eswatini0011Ethi

219、opia0001Madagascar0011Total179200487597Figure 3.3:Corporate ratings rise,particularly from GCRNumber of corporates rated by ratings agenciesSource:Refinitiv,GCR,OMFIF analysisNote:International ratings are from Fitch,Moodys and S&P.Values taken in June of each year.DRC,Lesotho and Seychelles have no

220、 ratings.AFMI_INDEX_A4 Template_2022.indd 2703/10/2022 15:05:04Pillar 4:Capacity of localinvestorsPictured:Arusha Region,Tanzania28|Absa Africa Financial Markets Index 2022AFMI_INDEX_A4 Template_2022.indd 2803/10/2022 15:05:05Absa Africa Financial Markets Index 2022|29 Sources:AFMI survey 2022,OECD,

221、IMF,national securities exchanges,national central banks,national pension regulators,OMFIF analysisNote:The overall Pillar 4 score represents the average harmonised score of both pillar 4 indicators.Scores from 2021 are updated to incorporate any revisions,newly available data and/or improved data c

222、ollection methods and may not reflect the Pillar 4 scores published in AFMI 2021.More information on pp.42-3Figure 4.1:Southern African pension funds continue to lead the wayContributing indicators and overall harmonised scores for Pillar 4,max=100Aggregate pension fund assets declined by 11.2%in 20

223、21 in dollar terms,with 11 AFMI countries reporting lower figures than the previous year.Despite its pension fund assets per capita falling,Namibia maintains its top spot,while South Africa and Mauritius retain their place in the top three.Several countries are pursuing financial inclusion initiativ

224、es,such as financial education programmes and mentorship.Pillar 4 evaluates the potential for institutional investors to drive capital market growth based on the size of pension fund markets,both in per capita terms and relative to local listed securities.Financial inclusion strategies are also exam

225、ined.0102030405060708090100NamibiaSouth AfricaMauritiusBotswanaEswatiniSeychellesMoroccoNigeriaGhanaLesothoMozambiqueKenyaCameroonTanzaniaEgyptZimbabweUgandaRwandaCte dIvoireMalawiAngolaSenegalZambiaEthiopiaMadagascarDRCPension fund sizePension fund assets to domestically listed assetsPillar 4 score

226、2021 Pillar 4 scoreAFMI_INDEX_A4 Template_2022.indd 2903/10/2022 15:05:0630|Absa Africa Financial Markets Index 2022reporting private pension schemes for the year 2021 owing to the regulatory relief granted by the FSC Mauritius in respect of the submission of audited financial statements.Accordingly

227、,challenges in reporting probably overestimate the true scale of the decline in pension assets.In any case,Mauritius continues to score highly on this indicator.Its pension assets under capita are only surpassed by Namibia,which retains its top spot in Pillar 4 for a third consecutive year,as well a

228、s Botswana.These southern African countries have benefited from the early establishment of pension systems,and their close links to the largest exchange in Africa,the Johannesburg Stock Exchange,which has enabled pension funds to accumulate large holdings.One country which bucked the regional trend

229、was Seychelles.Its pension assets per capita climbed by 27%last year,contributing to the country scoring 15 points higher in Pillar 4 overall and rising two places to sixth.That said,this almost entirely reflects exchange rate effects.Pension assets per capita were nearly consistent in local currenc

230、y terms but were valued much higher in dollar terms owing to the strong appreciation of the Seychelles rupee in 2021.Elsewhere,pension assets per capita also rose strongly in Zimbabwe,Ethiopia,Ghana and Cte dIvoire.These countries are among the 17 in the index with pension holdings of less than$200

231、per capita,suggesting there is a long way to go to enhance pension funds capacity.Diversification,localisation and capacity buildingPillar 4 also considers the size of pension funds relative to their domestically listed assets to gauge the capacity of institutional investors to drive capital market

232、growth.Market liquidity is considered on this front too,whereby pension funds which engage in greater domestic trading rather than buy-and-hold strategies are allocated higher scores.On Pension funds play a significant role in local markets.Their long investment horizons,in addition to the magnitude

233、 of assets they hold,can facilitate the diversification of markets beyond safe asset classes such as bonds and cash and towards investments such as listed equities,corporate bonds,infrastructure and real estate.For the second consecutive year,pension assets per capita in the index generally fell fro

234、m the previous year.In dollar terms,aggregate pension fund assets declined by 11.2%,with 11 countries reporting lower figures in 2021(the latest available data)than in 2020.In per capita terms,the largest decrease in reported pension assets was in Mauritius,down 27%.However,one local respondent ment

235、ioned that the contraction is mainly due to a lower number of In dollar terms,aggregate pension fund assets declined by 11.2%,with 11 countries reporting lower fi gures in 2021.Figure 4.2 Mauritius sees the largest fall in reported pension funds per capitaPension assets per capita,$bn05001,0001,5002

236、,0002,5003,0003,5004,0004,5005,000NamibiaBotswanaMauritiusSouth AfricaSeychellesEswatiniMoroccoKenyaLesothoNigeriaGhanaZimbabweUgandaTanzaniaRwandaMalawiEgyptEthiopiaCte dIvoireZambiaAngolaMozambiqueCameroonSenegalMadagascarDRC20212022Source:National central banks,national financial regulators,pensi

237、on industry trade bodies,national finance ministries,African Development Bank,OECD,IMF,OMFIF analysisAFMI_INDEX_A4 Template_2022.indd 3003/10/2022 15:05:06Absa Africa Financial Markets Index 2022|31 these fronts,scores for Nigeria and South Africa fell this year as pension funds comprised a smaller

238、share of domestically listed securities.Among the countries in our sample,policy-makers have introduced a variety of regulatory measures to boost investments in local markets.In 2017,Namibias financial regulatory authority,Namfisa,increased minimum domestic investment to 45%from 35%.Although the 45%

239、threshold came into effect in 2018,this value was only met last year.Namfisas local investment holdings expanded to 49.3%by end-2021,compared to 44.5%a year earlier.In the same vein,regarding 2019 legislation regulating pension funds,a respondent to this years survey from Lesotho stated that the pro

240、mulgation of the Pensions Act that specifies local asset requirement ratio gives hope for more money to be invested locally.This will enhance demand for investible assets and hence create supply.In contrast,South Africa passed Regulation 28 in July 2022,which will come into force in January 2023,to

241、prevent excessive concentration risk by widening the scope of investments.In effect,this will encourage more investment in international markets,perhaps at the expense of deepening domestic markets.Aside from the local or foreign split,there continues to be a wide range of diversification strategies

242、 among institutional investors across jurisdictions.Traditional asset classes remain the norm among pension sectors.For AFMI countries with an available breakdown,on average pension fund portfolio investments were primarily held in fixed-income instruments(40%)and listed equities(27%).Southern Afric

243、an countries pensions funds are the most diversified.The majority of South Africas holdings falls outside of traditional bonds and equities and include real estate,hedge funds,private equity funds and other mutual funds.While Namibia holds just 10%in alternative asset classes and investment vehicles

244、,the pension sector is widely diversified across bonds(29%)and equities(52%).Similarly,more than half of pension fund assets in Botswana(64%),Mauritius(52%)and Malawi(51%)are held in equities.In some cases,countries are struggling to break out from lower-risk fixed-income instruments to ramp up loca

245、l investor capacity.In Angola,the majority of assets(67%)is held in cash and deposits.With 89%invested in bills and bonds,Ghanas pension portfolio is the most concentrated.Given the sell-off in the countrys sovereign bonds,as noted in Pillar 1,this lack of diversification harmed returns,which fell b

246、y-10%in real terms in 2021.Egypts pension sector is also heavily concentrated in traditional asset classes,with 79%of assets held in bills and bonds.On the investment strategies of local pension funds,one survey respondent from the country noted that we believe they are aware of the products beyond

247、government bonds and cash equities,yet they are not proficient or lack the risk appetite to take on positions in said asset classes or products.Financial inclusion and digitisation Building up savings and financial knowledge is necessary to develop local investor capacity.Policy-makers across the co

248、ntinent are working to upgrade market infrastructure and regulatory support for the development of technology-based tools to encourage financial inclusion.While these initiatives do not directly impact Pillar 4 scores,they demonstrate how countries can use innovation to increase financial access and

249、 participation,boost local markets and build a broader investor base.Initiatives launched this year demonstrate a strong link between financial inclusion strategies and efforts to improve digitalisation.The promotion of saving,knowledge of pension funds and economic inclusion are goals of various pr

250、ogrammes.These include financial literacy initiatives,education programmes and mentorship.Survey participants revealed a plethora of new programmes that were introduced in the past year.These include the Eswatini Gender Financial Inclusion Road Map,Kenyas financial literacy programmes in school curr

251、iculums and the national financial literacy and inclusion campaign for youths and senior citizens launched by Mauritius financial regulator.The Central Bank of Malawi is also doing a large push in financial education,including National Pensions Awareness Week with workshops There are 17 countries in

252、 the index with pension holdings of less than$200 per capita,suggesting there is a long way to go to enhance pensions funds capacity.AFMI_INDEX_A4 Template_2022.indd 3103/10/2022 15:05:06Pictured:Franschhoek vineyards,South Africa32|Absa Africa Financial Markets Index 2022AFMI_INDEX_A4 Template_2022

253、.indd 3203/10/2022 15:05:08Absa Africa Financial Markets Index 2022|33 and virtual seminars.The Botswana Stock Exchanges pioneering Tshipidi mentorship programme guides companies to raise capital on the countrys exchange.Zambia is planning to implement more financial literacy programmes,including su

254、pplementary financial education materials for teachers and pupils in secondary schools.Corresponding with digital financial inclusion initiatives,a number of countries introduced online and/or mobile platforms this year to grow their retail trading bases.Uganda is a notable example:the Uganda Securi

255、ties Exchange launched a mobile platform which can be used to open a Figure 4.3:More countries offering online retail trading platforms Countries with digital platforms for retail securities tradingSource:AFMI survey 2021-22Online tradingMobile applicationKenyaMauritiusMozambiqueSeychellesUgandaZamb

256、iaZimbabweEswatiniGhanaIn progressMalawiIn progressAngolaMoroccoRwandaTanzania BotswanaNigeriaMalawisecurities central depository account.The Bank of Uganda also implemented the Okusavinga platform,which enables retail investors to buy treasury bonds through their mobile phones,even without a bank a

257、ccount.Several other jurisdictions also made progress on digital financial inclusion.The Stock Exchange of Mauritius,the Kenyan Capital Markets Authority,the Zimbabwe Stock Exchange and the Bolsa de Valores de Moambique all released mobile apps this year to provide online market data and/or trading.

258、The Malawi Stock Exchange and Ghana Stock Exchange are working on mobile trading platforms too.Policy-makers across the continent are working to upgrade market infrastructure and regulatory support for the development of technology-based tools to encourage fi nancial inclusion.AFMI_INDEX_A4 Template

259、_2022.indd 3303/10/2022 15:05:08Pillar 5:Macroeconomic environment and transparencyPictured:Victoria falls,Zambia34|Absa Africa Financial Markets Index 2022AFMI_INDEX_A4 Template_2022.indd 3403/10/2022 15:05:10Absa Africa Financial Markets Index 2022|35 Sources:IMF,World Bank,national central banks,

260、national finance ministries,OMFIF analysisNote:The overall Pillar 5 score represents the average harmonised score across all Pillar 5 indicators.Scores from 2021 are updated to incorporate any revisions,newly available data and/or improved data collection methods.They are also adjusted to be consist

261、ent with the current methodology,with inflation added and measures for living standards and export competitiveness removed.More information on pp.42-3Figure 5.1:Botswana takes top spot while high inflation weighs on most countries scoresContributing indicators and overall harmonised scores for Pilla

262、r 5,max=1000102030405060708090100BotswanaEgyptUgandaEswatiniNigeriaSouth AfricaTanzaniaDRCSeychellesMauritiusKenyaNamibiaCte dIvoireCameroonMoroccoSenegalRwandaZambiaZimbabweLesothoMozambiqueMalawiMadagascarGhanaEthiopiaAngolaGDP growthInflationNon-performing loansExternal debtMacro data standardsMP

263、C transparencyBudget releasesPillar 5 score2021 Pillar 5 scoreSeveral respondents expressed concern over capital flight,rising prices and monetary tightening as a result of the Russia-Ukraine war.Scores fell in many countries as a result of inflation rising.Botswana rises to the top of Pillar 5,ahea

264、d of Egypt,owing to its low external debt,small share of non-performing loans and transparent data releases.Pillar 5 looks at countries underlying macroeconomic environments and the transparency of economic data,which underpin the development of their financial markets.AFMI_INDEX_A4 Template_2022.in

265、dd 3503/10/2022 15:05:1136|Absa Africa Financial Markets Index 2022as its banking system remains fragile.Its NPL ratio rose to 20.3%in 2021,from 18.4%in 2020,and the Angolan authorities are working to restructure troubled public banks as part of the countrys IMF deal.On the plus side,Angolas debt tr

266、oubles have eased.Its external debt-to-GDP ratio fell to 72.7%in assets.The share of non-performing loans to gross loans fell in the majority of AFMI countries in 2021,with Eswatini and Zambia seeing the biggest reduction.This contributed to both countries higher scores in Pillar 5 this year.On the

267、other end of the spectrum,Angola scores lowest on this measure,and in Pillar 5 overall,Just as economies were recovering from the pandemic,shocks from the Russia-Ukraine war and the global monetary tightening cycle have emerged as a threat to macroeconomic growth and stability.The past two years hav

268、e emphasised the need to build resilience against external shocks by managing inflation,debt and financial risks.It has also highlighted the importance of providing regular economic data and transparent policy decisions to offer investors clarity during these uncertain times.Disparities in pandemic

269、recoveryAfter the pandemic-induced downturn in 2020,most economies recovered well in 2021.Last year,real gross domestic product rose above its 2019 level in all but seven AFMI countries.The exceptions were tourism-dependent island economies Mauritius,Seychelles and Madagascar and those in the south

270、of the region which have experienced sluggish growth for some time South Africa,Namibia,Lesotho and Angola.This latter group are expected to maintain below-average rates of economic growth over the coming years.Accordingly,they score relatively poorly on the GDP growth measure in Pillar 5.With the e

271、conomic effects of the pandemic unwinding,the average rate of annual growth among index countries is expected to pick up to 4.6%over the next five years,compared to 2.6%over the previous five years.World Bank and International Monetary Fund forecasts for Rwanda,Senegal and Mozambique are consistent

272、with strong annual growth rates of close to 7%over the next five years.All three countries are tied to IMF programmes designed to support structural reforms and medium-term growth.Moreover,output in Senegal is expected to be boosted by oil and gas facilities coming online in 2023,while liquefied nat

273、ural gas projects are set to begin later this year in Mozambique.The cyclical recovery from the pandemic is also reflected in the improving quality of banking sector Source:IMF,OMFIF analysis Figure 5.2:Growth expected to remain sluggish in southern African economiesCompound annual growth rate,five-

274、year historical average and forecast,%Source:Refinitiv,World Bank,IMF,OMFIF analysis-2-1012345678RwandaSenegalMozambiqueDRCCte dIvoireUgandaTanzaniaEthiopiaEgyptKenyaGhanaSeychellesCameroonMalawiMauritiusMadagascarBotswanaZambiaAngolaZimbabweNigeriaMoroccoNamibiaEswatiniLesothoSouth Africa2017-21202

275、2-26Historical averageForecast averageFigure 5.3:Debt burdens fall but remain higher than pre-pandemic levelsExternal debt,%of GDP0102030405060708090100NigeriaBotswanaDRCEswatiniNamibiaSouth AfricaZimbabweMauritiusTanzaniaEthiopiaMalawiCameroonEgyptUgandaCte dIvoireKenyaGhanaSeychellesMadagascarMoro

276、ccoLesothoSenegalRwandaZambiaAngolaMozambique202020212019AFMI_INDEX_A4 Template_2022.indd 3603/10/2022 15:05:11Absa Africa Financial Markets Index 2022|37 2021,from 89.1%in 2020.This remained the second highest ratio among AFMI countries,though,only surpassed by Mozambique.Debt ratios declined in mo

277、st economies last year owing to a rise in nominal GDP and improving fiscal positions.But this did not fully reverse the surge seen during the pandemic.For 19 countries in the index,external debt ratios in 2021 remained higher than they were in 2019,suggesting debt risks were lingering heading into t

278、his year.Botswana was a key exception.Its external debt ratio dipped below 10%,even lower than it was prior to the pandemic.Combined with its solid banking system and growth prospects,this factor elevated Botswana to the top position in Pillar 5 this year.The spillovers from the Russia-Ukraine confl

279、ict present a major threat to the region.This is playing out through tighter global financial conditions,capital outflows and higher debt vulnerabilities.As of July 2022,the IMF identified eight countries in,or at high risk of,debt distress:Cameroon,Ethiopia,Ghana,Kenya,Malawi,Mozambique,Zambia and

280、Zimbabwe.In the case of Zambia,there are encouraging signs that debt troubles will ease.The government is reportedly close to reaching a debt relief agreement with bilateral creditors,including China.A fresh$1.3bn IMF deal,agreed in August,may also pave the way for restructuring with Zambias private

281、 bondholders.Survey participants also mentioned disruption to supply chains,weaker global growth and elevated commodity prices as headwinds to their economies.Commodity exporters in the region,particularly for oil,should benefit,but not all can fully capitalise on high prices.Underinvestment in mini

282、ng sectors is constraining oil exports in Angola and Nigeria,and neither country is able to meet their OPEC+output quota.Measures of export competitiveness and living standards have been removed in this years AFMI index as year-on-year changes in these variables are broadly captured within the exist

283、ing measure of GDP growth.Inflation has been introduced to Pillar 5 as a timely measure of macroeconomic stability.Higher food and fuel prices have resulted in greater inflation across almost all countries in the index,weighing on disposable incomes and consumption.There were marked increases in inf

284、lation in Ghana,Malawi and Egypt in the 12 months to June,where price pressures have been exacerbated by sharp falls in Last year,real gross domestic product rose above its 2019 level in all but seven AFMI countries.their currencies.This weighed on their scores this year.Six other economies experien

285、ced double-digit inflation in June 2022,while it rose further into the triple-digits in Zimbabwe.Meanwhile,Seychelles,Zambia and Angola saw their currencies strengthen and inflation decline over the past year.That helped to elevate their scores in Pillar 5,particularly for Seychelles which rose 10 p

286、laces to ninth.Monetary and fiscal transparency in times of uncertainty In the face of multiple global shocks,policy-makers have had to act decisively.In the 12 months to June,21 central banks in the index have raised interest rates to combat high inflation.Egypt continues to score highly on these m

287、easures.The central bank has eight monetary policy meetings a year,with clear reporting of the schedule and publication of policy decisions.The countrys reporting of macroeconomic data is strong,with daily reporting of interest rates,monthly reporting of inflation and quarterly reporting of GDP,all

288、with minimal lags.Kenya and Botswana also score well for their clear and consistent macroeconomic data.By comparison,Madagascar is among the lowest scorers for their data standards.GDP figures are only available on an annual basis,often published at irregular intervals or with a significant lag.Howe

289、ver,Madagascar is taking steps to improve its fiscal transparency.It produces an annual fiscal budget,which can boost its credibility.Moreover,the Malagasy government now publishes granular public expenditure data on the Salohy online platform,and it is working with IMF specialists to make its fisca

290、l reporting more robust.Figure 5.4:Inflation has increased in all except Seychelles,Zambia and Angola Consumer price indices,%year-on-year 05101520253035SeychellesTanzaniaEswatiniCte dIvoireDRCNamibiaCameroonMadagascarUgandaMoroccoSouth AfricaKenyaLesothoSenegalMauritiusZambiaMozambiqueBotswanaEgypt

291、RwandaNigeriaAngolaMalawiGhanaEthiopiaJune 21June 22Source:Refinitiv,OMFIF analysis Note:Zimbabwe excluded from the chart,where inflation was 106.6%yoy in June 2021 and 191.6%yoy in June 2022.AFMI_INDEX_A4 Template_2022.indd 3703/10/2022 15:05:11Pillar 6:Legal standards and enforceabilityPictured:Fi

292、shermen on the Okavango River,Angola38|Absa Africa Financial Markets Index 2022AFMI_INDEX_A4 Template_2022.indd 3803/10/2022 15:05:13Absa Africa Financial Markets Index 2022|39 Source:AFMI survey 2022,ISDA,Frontclear,OMFIF analysisNote:The overall Pillar 6 score represents the average harmonised sco

293、re across all Pillar 6 indicators.Scores from 2021 are updated to incorporate any revisions,newly available data and/or improved data collection methods and may not reflect those published in AFMI 2021.More information on pp.42-3.Figure 6.1:Nigeria and South Africa score highest,legal reforms in the

294、 pipeline elsewhereContributing indicators and overall harmonised score for Pillar 6,max=1000102030405060708090100NigeriaSouth AfricaGhanaMauritiusUgandaMalawiZambiaKenyaTanzaniaBotswanaNamibiaZimbabweEgyptMoroccoAngolaCte dIvoireMozambiqueRwandaSenegalCameroonDRCEswatiniEthiopiaLesothoMadagascarSey

295、chellesNetting positions enforceabilityCollateral positions enforceabilityUse of master agreementsPillar 6 score2021 Pillar 6 scoreNigeria continues to score highest,bolstered by more widespread adoption of the three main standard master agreements.Improvements in enforceability have prompted more u

296、se of ISDA and GMRA master agreements in Ghana.Several countries highlighted projects targeting the enforceability of close-out netting and adoption of international legal standards.Pillar 6 considers countries alignment with international legal and contractual standards across financial markets,eva

297、luated by their adoption of standard master agreements and enforceability of close-out netting and collateral provisions.AFMI_INDEX_A4 Template_2022.indd 3903/10/2022 15:05:1440|Absa Africa Financial Markets Index 2022Using standard master agreements helps to build trust among market participants by

298、 providing a globally recognised framework for financial transactions.The main contracts which govern over-the-counter derivates and repurchase transactions are the International Swaps and Derivates Association Master Agreement,Global Master Repurchase Agreement and Global Master Securities Lending

299、Agreement.The enforceability of close-out netting and collateral provisions within these agreements is also important,as they serve to reduce counterparty risk in the event of insolvency or default.These factors provide market participants with greater certainty,reduce systemic risk and allow capita

300、l to be allocated more freely and efficiently.Scores for Pillar 6,which are informed by survey participants as well as legal opinions from the International Securities and Derivatives Association and industry practitioners,are unchanged this year.While this indicates there has not been a fundamental

301、 change in the robustness of legal frameworks in the past 12 months,there have been signs of progress in some countries.Nigeria which continues to score highest on Pillar 6 alongside South Africa has deepened its use of master agreements.This comes after the passage of the Companies and Allied Matte

302、rs Act and the Banks and Other Financial Institutions Act in 2020.These laws have promoted greater enforceability of netting-off provisions.Nigerias progress has been acknowledged by ISDA.In August 2021,Nigeria became only the third country in the index to receive a clean netting opinion from ISDA,w

303、hich provides a strong signal of legal credibility to domestic and international investors that close-out netting provisions are enforceable.One local survey respondent hopes that this will increase the attractiveness of Nigeria and serve as a springboard for accelerated growth of its markets.South

304、Africa and Mauritius have also received clean netting opinions from ISDA,as well as on their GMRA and GMSLA enforceability from the International Capital Market Association and International Securities Lending Association.Ghana,ranked third in this pillar,has also implemented domestic close-out nett

305、ing legislation.The recognition of the GMRA,later applied to all global standard documents,as enforceable under domestic netting legislation has been made more explicit by the Corporate Insolvency Act.This has contributed to a significant pick-up in the volume of transactions executed under GMRA ove

306、r the past year.But adoption of GMSLA standards remains limited,which weighs on Ghanas Pillar 6 score slightly.On the plus side,a survey participant mentioned that a technical committee made up of representatives from various market participants and regulators has been Figure 6.2:Broader range of co

307、untries making progress on close-out nettingStatus of close-out netting legislation and ISDA netting opinion in each jurisdictionSource:ISDA,OMFIF analysisClose-out netting enforceabilityISDA netting opinionSouth AfricaYesYesNigeriaYesYesMauritiusYesYesGhanaYesNoZambiaYesNoZimbabweYesNoEgyptUnder co

308、nsiderationNoEthiopiaUnder considerationNoMoroccoUnder considerationNoSeychellesUnder considerationNoUgandaUnder considerationNoAngolaNoNoBotswanaNoNoCameroonNoNoCte dIvoireNoNoDRCNoNoEswatiniNoNoKenyaNoNoLesothoNoNoMadagascarNoNoMalawiNoNoMozambiqueNoNoNamibiaNoNoRwandaNoNoSenegalNoNoTanzaniaNoNoIn

309、 the past year,Ethiopia joined Egypt,Morocco,Seychelles and Uganda in having its netting legislation status listed as under consideration by ISDA.AFMI_INDEX_A4 Template_2022.indd 4003/10/2022 15:05:14Absa Africa Financial Markets Index 2022|41 set up to produce guidelines for securities lending and

310、borrowing and work on adopting GMSLA.Countries working to bolster legal frameworksProjects to strengthen legal frameworks are in the pipeline elsewhere in Africa.Uganda,which ranks fourth in this pillar alongside Mauritius,is one example.It already recognised netting and collateral enforcement under

311、 the National Payment Systems Act of 2020.The authorities continue to work with global market institutions,such as ISDA,and financial development specialists to draft legislation to ensure greater netting enforceability across all master agreements.Frontclear a development finance organisation dedic

312、ated to money and interbank markets has provided technical assistance to the Bank of Uganda and efforts are underway to implement an umbrella guarantees facility Tradeclear.This would see Frontclear guarantee transactions between eligible local banks,encouraging a more liquid domestic interbank mark

313、et which would be underpinned by standard master agreements.With support from the United Nations Economic Commission for Africa,Frontclear is also working with the Bank of Zambia and the countrys financial sector to develop a customised onshore guarantee facility for repo transactions,which would bu

314、ild best practice application of GMRA documentation.Progress is being made in smaller markets,such as Ethiopia,too.In the past year,the country joined Egypt,Morocco,Seychelles and Uganda in having its netting legislation status listed as under consideration by ISDA.This follows a Frontclear-led revi

315、ew of legal and regulatory framework,including recommendations for GMRA and ISDA enforceability.Authorities in Rwanda are looking to bolster financial market uptake of standard master agreements.The National Bank of Rwanda,working with Frontclear and the International Finance Corporation,concluded a

316、 regulatory review in June relating Figure 6.3:Widespread adoption of standard master agreements remains limitedUse of key fi nancial market agreements in each jurisdictionSource:AFMI survey 2022,OMFIF analysisto the introduction of more market makers and the enforceability of GMRA legal documentati

317、on.In any of these markets,implementing these reforms and receiving clean legal opinions from the relevant international bodies would encourage greater market participation and boost scores in this pillar.In the meantime,despite its continued leadership in Pillar 6,there is some uncertainty about So

318、uth Africas legal framework.Potential concerns arise from the Financial Sector Laws Amendment Act 2021.This legislation gives the central bank the power to cancel agreements for failing financial institutions.The scope and effect of these powers are uncertain and the act provides no safe harbour for

319、 repurchase and securities lending transactions and only a limited safe harbour for derivatives.For example,the central bank can cancel any agreement where the relevant agreement gives a preference to some creditors over others in resolution.This could threaten netting provisions for repurchase and

320、securities transactions and,to a lesser extent,derivatives.It is worth emphasising there is still a lot of uncertainty over the specific implications of the legislation,and it will only come into effect on a date to be published in the government gazette.Nonetheless,the key point is that the grey ar

321、ea around the future enforceability of contracts may in itself be enough to weaken confidence and the volume of transactions among market participants.ISDAGMRAGMSLASouth AfricaWidely usedWidely usedWidely usedNigeriaWidely usedWidely usedWidely usedGhanaWidely usedWidely usedLimited useMauritiusWide

322、ly usedWidely usedNoUgandaWidely usedWidely usedNoKenyaWidely usedLimited useNoTanzaniaWidely usedLimited useNoMalawiNoWidely usedNoEgyptLimited useLimited useLimited useMoroccoLimited useLimited useLimited useBotswanaLimited useLimited useNoZambiaLimited useLimited useNoMozambiqueLimited useNoNoRwa

323、ndaLimited useNoNoCte dIvoireLimited useNoNoNamibiaLimited useNoNoSenegalLimited useNoNoAngolaNoLimited useNoCameroonNoNoNoDRCNoNoNoEswatiniNoNoNoEthiopiaNoNoNoLesothoNoNoNoMadagascarNoNoNoSeychellesNoNoNoZimbabweNoNoNoAFMI_INDEX_A4 Template_2022.indd 4103/10/2022 15:05:1442|Absa Africa Financial Ma

324、rkets Index 2022Using a variety of qualitative and quantitative data,the Absa Africa Financial Markets Index records the openness and attractiveness of financial markets in 26 African countries.Countries are scored on a scale of 10-100 based on six pillars comprised of over 40 indicators.The Africa

325、Financial Markets Index in focusPillar 1:Market depthProduct diversity Type of financial assets available,including sustainable finance and hedging products Currency availability of stock exchange productsSize of market Total sovereign and corporate bonds outstanding and equity market capitalisation

326、 as a share of GDPLiquidity Total turnover of sovereign bonds,corporate bonds and equities as a share of bonds outstanding and market capitalisation,respectivelyDepth Ability to clear government instruments denominated in local currency in international markets Existence of secondary market makers(b

327、ond market)Closing auction for fair tradeable market pricesPrimary dealer system Existence of primary dealer system Size of repurchase marketPillar 2:Access to foreign exchangeFX reserves adequacy Foreign exchange reserves in months of import coverageFX liquidity Interbank market foreign exchange tu

328、rnoverCapital restrictions Foreign exchange capital controls Existence of multiple or unified exchange rateOfficial exchange rate reporting Quality of data and frequency of publicationPillar 3:Market transparency,tax and regulatory environmentFinancial stability regulation Basel Accords implementati

329、on stage Climate stress testingCorporate reporting standards and governance Use of international accounting and reporting standards(International Financial Reporting Standards)Existence of corporate action governance structureTax environment Level of withholding taxes on interest and dividends,inclu

330、ding discounts for dividends from listed firms Number of tax treatiesFinancial information availability Existence of fixed dates and times for market reporting Publishing of data on sector and domestic versus non-resident ownership of domestic assetsMarket development policies Existence and effectiv

331、eness of capital market development strategyESG initiatives and standards Existence of incentives for issuing sustainable finance products Initiatives integrating ESG into financial market standardsExistence of credit ratings Existence of international sovereign credit rating(Fitch,Moodys,S&P)Number

332、 of corporate credit ratings(Fitch,Moodys,S&P)and coverage by regional ratings agency(GCR)Pillar 4:Capacity of local investorsPension fund size Value of pension assets per capitaPension fund assets to domestically listed assets Pension fund assets as a share of listed equities and bonds,weighted by

333、market liquidityPillar 5:Macroeconomic environment and transparencyGDP growth Five-year average annual GDP growth,historical(2017-21)and projected(2022-26)Inflation Year-on-year change in consumer price indexNon-performing loans Non-performing loans as a share of gross loansMacroeconomic data standards Publication and frequency of GDP,inflation and interest rate dataExternal debt External debt as