New financial products, regulatory improvements and more responsive economic policies have enhanced the performance of countries in the Absa Africa Financial Markets Index 2019, produced by OMFIF. Now in its third year, the index evaluates financial market development in 20 countries across the continent.

South Africa retains the top position due to its sizeable lead in Pillar 1, ‘market depth’. While it is likely to remain an outlier in this pillar, the creation of new bourses and key mergers between existing ones will improve the standing of other countries in coming years. This year, Botswana, Kenya and Namibia join the ranks of countries that score more than 50 in Pillar 1, indicating a deepening of individual markets.

Other countries are catching up in the rest of the index. Egypt has the highest score in ‘macroeconomic opportunity’, while Mauritius and Kenya claim the two top spots in ‘legality and enforceability of standard financial markets master agreements’. Ethiopia, although lagging behind, has significant potential for improvement in the coming year. It has announced plans to establish a stock exchange in 2020.

‘The steady improvement across African countries is partly a testament to the impact of our index across the continent,’ says George Asante, head of global markets for Absa regional operations.

‘There has been a concerted effort among African policy-makers to react to the findings. This can be seen in the vast improvements in Pillar 6, ‘legality and enforceability of standard financial markets master agreements’, where countries have responded to past findings in order to align with best practice. The index is becoming a powerful barometer for policy-makers and playing a role in building an Africa which is able to fund itself.’

‘As a business with strong pan-African aspirations, we are constantly trying to find ways to facilitate and encourage progress in the region. We are excited about the impact the index is having on African financial markets. We believe in the power of thought leadership and insights to help strengthen the region and build stronger and more robust financial markets,’ says Charles Russon, chief executive officer at Absa Corporate and Investment Banking.

The improvements outlined in the third Absa Africa Financial Markets Index underline significant progress across Africa’s financial markets. The first edition in 2017 shed light on the disadvantages of rigid foreign exchange regimes, which handicapped investors and constrained countries’ ability to deal with global developments. Subsequently, many countries have moved to more flexible exchange rates, improving their policy responsiveness and shock absorption capability. Similar positive changes can be seen in growing consciousness of the importance of local investors and improvements in the transparency and availability of market data.

‘We welcome these vital signs of improvement in several African countries,’ says David Marsh, chairman of OMFIF. ‘New products like the world’s first sovereign blue bond issued by the Seychelles, or regulatory improvements in Mauritius and Ghana, prove that the African continent is moving in the right direction. The index is now a piece of important evidence for tracking progress in the region.’

‘The Africa Financial Markets Index has helped our country design its reform plans with a view to promoting macroeconomic stability,’ says Akiules Neto, executive director and board member at the Angola Securities Exchange.

The 20 countries covered by the index are Angola, Botswana, Cameroon, Egypt, Ethiopia, Ghana, Ivory Coast, Kenya, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Rwanda, Senegal, the Seychelles, South Africa, Tanzania, Uganda and Zambia. The index evaluates countries across six pillars: market depth; access to foreign exchange; market transparency tax and regulatory environment and market transparency; capacity of local investors; macroeconomic opportunity; and legality and enforceability of standard financial markets master agreements.

In addition to quantitative analysis, OMFIF gained further insights by surveying more than 40 policy-makers and top executives from financial institutions operating across the 20 countries, including banks, investors, securities exchanges, central banks, regulators, audit and accounting firms and international financial and development institutions.

Stories Continues after ad

The Bank of Uganda (BoU) in its 2018/ 2019 Annual Report has confirmed that dfcu Bank is in preparations to leave 48 properties that the defunct Crane Bank Limited (CBL) was operating its branches before it was taken over by its rival in January 2017 in a Shs200 billion transaction.

“Following the Court’s ruling … dfcu Bank Limited in a letter dated September 12, 2019 communicated to BOU its decision to exercise its option to rescind its interest in purchasing the 48 properties pursuant to clause 8.7 of the Agreement,” BoU says in its latest annual report.

The report adds that as part of the rescinding of this purchase, dfcu will return to Bank of Uganda Certificates of title for Meera Investments Limited ‘and requires Bank of Uganda to pay dfcu the new book value of properties recorded in the assets and inventory compilation as October 20, 2016.’

On August 26, 2019, Court ruled on Miscellaneous Application No.320 of 2019 in favor of Sudhir Ruparelia and Meera Investments Limited dismissing Suit No.493 of 2017 where Crane Bank (receivership) had sued Sudhir Ruparelia and Meera Investments Limited to recover Shs397 billion allegedly swindled.

Court ruled that costs of the application be paid by the Bank of Uganda on the basis that Crane Bank (in receivership) is non-existent and does not have locus standi to put forth any claim against Sudhir and Meera Investments Limited.

A recent leaked document showed dfcu Bank calling for bids from companies that want to provide consultancy services at it seeks to relocate its branches to new areas in various districts and towns across Uganda.

Dfcu Bank has been operating its business in buildings/properties belonging to Meera Investments Limited since it acquired CBL over two years ago.

In August this year it emerged that the bank was misled by city Law firm Sebalu & Lule Advocates to illegally transfer title properties into its name yet the properties belong to Meera Investments Ltd even though it had leased them to Crane Bank Limited.

According to a leaked dossier, the Sebalu & Lule Advocates who have been barred by court from representing the same bank against city tycoon Sudhir Ruparelia for being conflicted. The law firm misled dfcu Bank to transfer freehold titles from Crane Bank Ltd during the controversial takeover.

Stories Continues after ad