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SA is the best place for business in Africa

A few countries on the continent are probably not fit to consider for investment or business at all.
Southern African economies scored well on the basis of pension assets per capita. Image: Bloomberg

As in previous years, South Africa got the top spot in the Absa African Financial Markets Index (AFMI) due to the strength and depth of its financial markets and the effective legislation that boosts investment potential.

However, in a presentation of the research results on Wednesday morning, the panel of experts from Absa disclosed that SA’s scores in several of the categories declined as the business environment and the economy worsened due to the impact of the Covid-19 pandemic, as was the case for the scores of the countries surveyed as part of the annual research.

SA’s total score fell from 89 out of a potential 100 in 2020 to 83 in 2021.

The researchers noted that most of the countries fared worse than in the previous year. In fact, only four showed improvement in their scores since 2020, and these improvements were only marginal. Most saw rather large deterioration in the measurements most investors would rate as very important.

The Absa Africa Financial Markets Index evaluates financial market development in 23 countries, and highlights economies with the most supportive environment for effective markets.

The aim is to show the present positions, as well as how economies can improve market frameworks to bolster investor access and sustainable growth, according to the research done in collaboration with the Official Monetary and Financial Institutions Forum (OMFIF).

OMFIF uses data from central banks, securities exchanges and international financial institutions in its research. It surveyed over 50 policy makers, regulators and executives from financial institutions operating across the 23 countries, including banks, securities exchanges, central banks, regulators, audit and accounting firms, and international financial and development entities.

OMFIF describes itself as an independent think tank for central banking, economic policy and public investment – a non-lobbying network for best practice in worldwide public-private sector exchanges.

“At its heart are global public investors – central banks, sovereign funds and public pension funds,” it says, adding that these entities hold investable assets of $42 trillion, equivalent to 43% of global GDP.

‘Objective indicator’

Jason Quinn, Absa Group interim CEO, says the index report has become a critical tool for countries seeking to strengthen their financial markets infrastructure.

“The index records countries’ openness to foreign investment and is an objective indicator of the attractiveness of Africa’s capital markets, intended for use by policy-makers, investors and asset managers around the world.

“At the core of AFMI is a push towards deeper financial markets that are open, transparent and accessible and facilitate the mobilisation of savings towards investment in productive assets,” says Quinn.

The index assesses countries according to six ‘pillars’, namely market depth; access to foreign exchange; market transparency, tax and regulatory environment; capacity of local investors; macroeconomic opportunity; and the enforceability of financial contracts.

The researchers noted that the index has been expanded, with the availability of sustainable finance products – such as green bonds and equities – now taken into account when measuring market depth.


Charles Russon, chief executive of corporate and investment banking at Absa, says: “While some might find it disheartening to see the average score drop across the board, Africa is navigating an extremely tricky economic atmosphere. Recovery from the Covid-19 pandemic has not been as straightforward as we would have hoped last year, and this has had a large impact on the twin challenges the continent faces in reinvigorating financial markets post-pandemic, while strengthening market infrastructure.”

The index reveals that some countries in Africa got such dismal scores that very few investors and businesses would consider doing business there.

At the bottom of the list is Ethiopia with a score of only 25, just ahead of Cameroon (29), Lesotho (30), Angola (33) and Senegal (34).

In instances, even SA’s high score of 83 is often not even enough to entice local investors to invest here, given the huge wave of money flowing offshore or into investment products with global exposure.

South Africa, Mauritius and Nigeria remained at the top of the index, with OMFIF noting that the scores slipped, partly due to the inclusion of the environmental, social and governance measurements.

The average score in the index fell to 46.4 out of 100 in 2021 from 50.8 in 2020.

Of concern should be that only seven of 23 African countries scored higher than 50.

Seychelles, Eswatini and Ivory Coast deteriorated the most in their rankings.

Pillar 1: Market depth

Scores dipped slightly due to lower equity market turnover, which has persisted since the onset of the Covid-19 pandemic. While market capitalisation rose in almost all of the countries in the index, it was not enough to offset weak trading activity.

Only nine countries have introduced financial products that can be classified as ‘green’ or ‘sustainable’, with green bonds available in seven countries, either on 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.

Pillar 2: Access to foreign exchange

Foreign exchange reserves grew by 24% overall, with SA in the lead, followed by Egypt, Rwanda and Uganda. However, the report notes that “a lack of liquidity in the foreign exchange markets weakened across almost all countries”.

Pillar 3: Market transparency, tax and regulatory environment

Nearly all countries’ scores declined due to lower marks in capital market development. Poor performance on the new indicators that look at incentives for issuance of sustainable financial instruments, integration of sustainability factors in financial market standards and adoption of climate stress testing also contributed to the decline.

Actually, things are not looking bad in this category.

Most countries maintained relatively high scores of above 55%. It is also the category in which Africa scored the highest marks on average, probably due to global legislation controlling financial transactions and the involvement of international players in financial markets.

Pillar 4: Capacity of local investors

This measurement evaluates local investor capacity based on the size of the pension fund market and its potential to drive market activity. Collectively, scores dropped by 6.3 points, with 17 countries falling down the rankings.

Aggregate pension fund assets in the index declined by 1.9%, with 11 countries reporting lower figures for 2020. Maintaining its lead from last year, Namibia earns full points in this pillar for having the largest pool of pension assets relative to its (small) population.

Southern African economies scored well overall measured on a basis of pension assets per capita, notes the report.

Namibia, Botswana, South Africa and Eswatini are all in the top five for this indicator, along with Mauritius.

The researchers attribute the good scores to the early establishment of pensions systems in these countries, as well as their proximity to the Johannesburg Stock Exchange, which enabled funds to build up sizeable assets compared to others African countries.

The report notes that around a fifth of Namibia’s pension assets are invested in the common monetary area, which it shares with South Africa, Eswatini and Lesotho.

However, weak potential on the part of the domestic pensions market in other African countries meant that 19 of the 23 countries failed to score over 50.

Pillar 5: Macroeconomic outlook 

Countries in Africa were credited with the potential for strong economic recovery. “Countries generally performed best in Pillar 5, achieving an average score of 62. Egypt regains the lead – which it lost to South Africa last year – propelled by strong gross domestic product growth in 2020,” according to the report.

“The macro impact of the pandemic continues to be felt in this sector with economic growth for many countries subdued and public finance showing strain.

“SA moved down one place. Despite having higher GDP per capita and a larger export market share than Egypt, South Africa’s bank loans deteriorated, and the country continued to experience poor economic growth in 2020.”

This measurement is based on composite five-year historical GDP growth and a five-year forecast, GDP per capita, performance of export markets, the regular publication of economic data, government finances and the quality of bank loans to customers.

Pillar 6: Enforceability of standard master agreements

African countries fared badly in the critical measurement of whether a financial contact or agreement with regard to a financial instrument would be honoured.

While SA, Nigeria and Ghana earned full points, Mauritius, Uganda, Zambia and Malawi missed out on joining the countries at the top by not yet fully adopting standard master agreements.

“Regulatory frameworks need to be in place to ensure the enforceability of contracts and continuity of transactions in the face of uncertainty. Pillar 6 evaluates countries based on the enforceability of close-out netting rules and use of standard financial markets master agreements,” explains the report.

Sixteen of 23 countries scored less than 30. “This stark disparity shows the unevenness of contractual standards across the region.

“The enforceability of close-out netting within a country’s financial system promotes financial stability. Close-out netting serves as the primary means of credit risk mitigation especially for over-the-counter (OTC) derivatives.

“It ensures that commercial transactions continue to be viable, notwithstanding default due to adverse economic and market conditions or unforeseen circumstances that can be treated as force majeure, such as the pandemic,” says the report, adding that close-out netting reduces credit exposures and credit shortfalls for commercial banks and capital market intermediaries.

The authors and proponents of the African Financial Markets Index put a positive spin on the deterioration of the scores in a discussion of the report, saying that the worsening figures are mostly attributed to methodological changes adopted to better reflect country performance and evolving trends in financial markets.

However, it concludes that African economies face more challenges in reinvigorating their financial markets while strengthening their market infrastructure through technological innovation and policies aimed at enabling investment.

“The pandemic has reinforced the importance of deepening domestic markets to hedge against foreign capital outflows and help the region achieve its full potential,” says Quinn.

Read: After continental retreat, SA retailers strain for profits at home




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This is great news. South Africa keeps going from strength to strength.

Last month, we had the largest current account surplus, ever on record.

Also, the Rand is back under R15 to a dollar and there’s still alot of demand for our resources.

Great news, ja right! We’re just the strongest horse in the glue factory. The one eyed king in the land of the blind. Going downhill fast.

Yip … like the DA is the best political party in a crowd of bumbling no-hopers and thieves.

wrong wrong wrong, in the land of the blind….POPEYE is king 😉

Ive reading your comments for a while now, and have come to the conclusion that are surely a troll. Nobody cant truly believe the bull you spend your time typing

@Charou Oh, he is definitely a troll. Curious to know what his actual thoughts are.. What worries me are the upvote he gets every time he posts something completely detached from reality.


I think you need to call Rob Hersov…

Check out what Rob says about prospects in SA.

Now there is an interview with someone that can actually buy some essential freedom back for the people. If he was true to his attitude he would recover some of the lost media.

the only rock in the shoe is the HOPELESS unemployment rate, otherwise great news….oh gee… I forgot about ESKOM!

It’s not that SA is doing well at all (under the ANC), but rather that the nations to the north are doing worse or are in the status quo position of capture and quagmire.

Let’s be honest, we are in bad company in this analysis. Let’s rather compare ourselves to European countries.

The nations to the North have been at it for longer! We are catching up very quickly indeed. Soon Lesotho will become premier Investment destination!

That’s my point. When you compare yourselves to the best, not the worst, it shows the real picture.

If this is accurate, all I can say is: God help Africa!

for the first time the national anthem makes sense …..yes may God help us all!

AND the onerous business regulations?? The B E E B S?? The slow walk of “trying” to start a business? The corruption?? The looting of the state??? The best is all the cronies, wanna-be’s nepotism and on the job trainees’ in government are CLUELESS. They are claiming so much better off??? Junk, Junkier, soon junkiest. You can put lipstick on a pig. Still a pig.

BEE = Brown Envelope Empowerment … BBEE = Big Brown Envelope Empowerment … BEEB = Brown Envelope Empowerment Blockbuster …

Sigh …

Looking forward to the riposte from Mr EFF Commissar.

Its like saying you are the best looking person in the burns unit, not much of a achievement.

Give us a chance hey

We’ve almost caught up

Anywhere but Africa is the best place to invest in Africa.

SA may be the best place in Africa to invest in, but it surely doesn’t mean much. I shall still divest my money in this country. Not worth the while.

Not sure what they are smoking, but I would love some!!

By now South Africa was supposed to be a Second World country at best! Of course we appear to be the best in Africa but thats been the case for quite some time and we’ve failed to take advantage of that and build on it. Instead our government through corruption has dragged us down to an extent we might never recover from. We’re not the biggest economy in Africa either, Egypt and Nigeria took those spots, anybody who can’t see that in the next 10 years SA will be crushed economically is blind, move while you can people, you deserve so much better anyway. And if you can’t move, change your money into hard currency and don’t store all of it in this shrinking ship of a country!

Perhaps more applicable to the “business of crime”….

End of comments.





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