Uganda Overtakes Kenya in Ranking of Most Promising Financial Countries

An aerial view of Nairobi City's skyline in 2023.
An aerial view of Nairobi City's skyline in 2023.
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Eyeconic Media

Kenya's financial market has been on a downward spiral after the country dropped by five positions as per the latest edition of Absa Africa Financial Markets Index.

According to the report, Uganda emerged as the most developed financial sector in Eastern Africa climbing from position 11 in 2020 to position 5 in 2021.

Kenya, on the other hand, dropped from position 7 in 2020 to position 10 in 2021 after losing 11 points from 58 to 47.

Uganda's Kampala City was praised for possessing large pension fund assets under management but has illiquid markets while Kenya had a progress in sustainable finance supports market development.

An undated image of Uganda President Yoweri Museveni in a past event
An undated image of Uganda President Yoweri Museveni in a past event
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Kampala led in terms of growth of foreign exchange markets, macroeconomic opportunities, and enforceability of standard master agreements.

Affected by the recent intense political activity, Nairobi's financial activity has been on the decline dropping from position 3 in 2019 to 7 in 2020.

Judging by the six pillars of capital markets growth, Kenya performed poorly in building capacity for local investors where it garnered a score of 24 followed by its ability to enforce standard master agreements where it got 28 points behind Uganda's 90 points.

The country, however, performed better in market depth, market transparency, tax and regulatory environment as well as access to foreign exchange.

"Green bonds are the most popular instrument, available in seven countries either in exchanges or over the counter. Kenya and Morocco score highest in this indicator for having green or sustainable bonds, equities and mutual funds in their markets.

"Additionally, Kenya has issued ethical securities to fund socially responsible investment opportunities," read the statement in part.

The new development came even as the shilling sank lower in comparison to the dollar hinting at a continually spiking inflation rate affecting the price of doing business and importing goods.

As of now, local currency exchanged at an average of 121.21 as of Wednesday, October 19, which puts a strain on the local economy reeling from the effects of the pandemic, Russia-Ukraine war and the recent General Elections combined.

Kenyans at a street in Nairobi City's downtown area.
Kenyans at a street in Nairobi City's downtown area.
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