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Uganda maintains its rank in Absa Africa Financial Markets Index amidst #Covid-19 pandemic

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The newly released Absa Africa Financial Markets Index indicates that Uganda has maintained its overall ranking of 10th from 2017. The national score increased from 50 in 2017/18 to 52 out of 100 in 2019/20.

However, Uganda remained in 10th position behind leaders; South Africa, Mauritius, Nigeria, Botswana, Namibia, Ghana, Kenya, Morocco and Zambia and respectively. The Index also shows Uganda was second in the East African Community (EAC) after Kenya, Tanzania and Rwanda, respectively.

The ranking is alluded to the country’s strength in access to foreign exchange, liquid forex market, healthy foreign exchange reserves that are above five months of import cover as well as a vibrant interbank swaps and forwards market that is supported by an active interbank money market.

Uganda strongly scored in market transparency, tax and regulatory environment, ranking sixth overall and first in the East African Community (EAC). This reflects the moderate risk of national debt distress, sustaining of the sovereign credit ratings at ‘B’ by Standard and Poor’s and ‘B+’ by Fitch Ratings, and compliance with International Financial Reporting Standards together with the commendable tax and accounting environment that is overseen by an independent oversight body, the Institute of Chartered Public Accountants of Uganda.

Speaking about Financial Markets Index, the Deputy Governor Michael Atingi-Ego said Uganda’s competitive macroeconomic opportunity, ranking sixth overall, and first in the EAC is due to a record of strong economic growth backed by appropriate monetary policy.

“Uganda has a lot to learn from its peers to catch up in market depth, the capacity of local investors, as well as the legality and enforceability of standard financial market master agreements. A host of reforms are underway to address the poor performance in some indicators, for better ranking in the future.”

He said the liberalisation of the pension sector in Uganda while preserving national interests and securing public confidence in the private institutional players, would significantly expand and deepen the non-bank financial sector.

“Uganda’s financial sector has been resilient through the pandemic partly through accelerated digitalisation and the containment of near term risks to financial stability aided by decisive policy measures by the BoU.”

“The slow economic recovery poses vulnerabilities to financial stability, including through the impact on earnings of households and businesses as well as the banking sector asset quality. But while credit extension remains subdued; on aggregate, banking institutions have strong liquidity and capital buffers to absorb emerging shocks.”

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