Financial Market Index Report: A critical tool in the development of African markets

The African story is a great one and her future remains pregnant with possibility. Africa has vast, dynamic markets which offer great opportunities for growth and investment for both local and foreign investors. To showcase this, Barclays Bank Botswana recently launched its inaugural Absa Financial Market Index, which is designed to evaluate financial market development in 20 African countries including Botswana. In addition, it is to highlight possible growth aspects for these countries.

This report is done by assessing six pillars: market depth; access to foreign exchange; market transparency; tax and regulatory environment; capacity of local investors; macroeconomic opportunity, and the legality and enforceability of standard financial markets master agreements. All of these inspire investor confidence. The report showcases understanding of our continent’s financial markets and enables the growth of the financial services industry locally and in Africa as a whole.

Findings from the 2018 Report shows that the five-highest ranked financial markets in the index are: South Africa, which is in the first position; Botswana, which rose to second place from third last year; Kenya, which climbed two spots on improved access to foreign exchange; Mauritius, which moved down to the fourth place from second last year; and Nigeria, owing to improvements in administrative efficiency and tax incentives that have boosted the country’s regulatory environment.

With the above celebratory achievement for Botswana, it is important to develop policies that will continue to support and improve our local financial market accessibility. It is important to maintain the success made thus far and any threat to Botswana’s achievement must be addressed to prevent any market misconduct. To continue to develop and improve our financial market, there are numerous areas that need to be addressed such as low levels of interbank foreign exchange trading, low bond markets and equity turnover and limited product diversity. All of these are very critical to the development and growth of our local markets.

The question now becomes, what can be done to address these challenges? There is need for working partnerships with relevant market participants. It is imperative that they come together to discuss and find solutions to topics that remain at the centre of Botswana’s development agenda and of the entire continent. Good governance and auditing standards also remain a priority in building confidence and trust in financial markets.

With the availability of aid tools such as the Absa Financial Market Index Report designed to guide and track development in local African markets, it is important that Botswana takes full advantage of them. This means it is time to drive conversations and facilitate discussions amongst policy markets, market participants and relevant stakeholders to find and address market gaps and also track progress on an ongoing basis and cement and promote its position in the continent’s rankings.

*Spencer Moreri is the Head of Marketing and Corporate Relations (Acting), Barclays Bank of Botswana