Access to foreign exchange is a crucial aspect of financial market stability, impacting trade, investment, and overall economic growth. In Africa, many countries have struggled to secure an adequate amount of foreign currency due to various factors such as economic instability, fluctuating global commodity prices, and policy challenges. However, some nations have made significant strides in improving access to foreign exchange, as highlighted in the Absa Africa Financial Markets Index.
The index, now in its eighth year, monitors financial market development across the continent, assessing the accessibility, openness, and transparency of markets. This year’s report shows an overall improvement, with 23 countries increasing their scores, a significant increase from 15 countries last year. This marks the highest proportion of improvement in the past seven years.
One of the primary drivers behind these improvements has been more favorable global financial conditions, resulting in increased activity in securities markets, improved pension fund asset values, and stronger foreign exchange reserves. Additionally, macroeconomic conditions have shown improvement, with inflation decreasing across the continent, despite exceptions like Angola and Nigeria.
Transparency in policies, particularly in foreign exchange markets, monetary policy, and corporate credit ratings, has also seen notable gains. Among African nations, South Africa leads the pack in foreign exchange accessibility, scoring 87 out of 100. The country’s well-developed financial markets, deep capital reserves, and flexible exchange rate system give it a competitive edge.
Following South Africa, Madagascar secures the second spot with a score of 79, followed by Mauritius in third place with a score of 76. The top 10 African countries with easy access to foreign currency are as follows:
1. South Africa – 87
2. Madagascar – 79
3. Mauritius – 76
4. Kenya – 70
5. Botswana – 68
6. Egypt – 67
7. Uganda – 67
8. Morocco – 65
9. Cabo Verde – 65
10. Tanzania – 60
These rankings highlight the progress made by African countries in improving access to foreign exchange and creating more transparent and open financial markets. The data from the Absa Africa Financial Markets Index serves as a valuable tool for policymakers, investors, and stakeholders in assessing the financial market landscape across the continent.
