Geopolitics triggers worst slide in African markets since 2021
Africa’s leading financial markets suffered a setback last year as market depth weakened and turnover declined in the face of a turbulent trade climate and geopolitical tensions.
Out of the 29 countries covered by Absa Group’s latest Africa Financial Markets Index, only 10 saw their scores improve relative to last year.
In contrast, the scores for 11 countries fell, weighed down by weaker market depth, reduced secondary bond trading and new issuances, liquidity challenges, and foreign exchange reforms, which in turn led to a decline in pension fund assets across 19 markets.
The drop is the steepest since 2021, when 19 of the 23 markets surveyed saw their scores slide.
“On a headline basis, the last year may feel like a bit of a disappointment,” Absa Chief Executive Officer Kenny Fihla said in the report on Thursday. “But the detail shows that progress continues to be made across the region, particularly in foreign exchange reforms, improved product diversity, and action on climate change.”
The continent has been buffeted by the uncertainty caused by US trade tariffs as well as conflict in the Middle East and the ongoing war in Ukraine.
That’s tended to overshadow steps African governments have taken to develop their markets.
These include rationalising foreign exchange trading in Nigeria and Uganda, and the launch of Tanzania’s first sovereign sukuk bond. Eighteen of the surveyed economies now offer environmental, social and governance-related instruments or Islamic financial products.
“Africa continues to demonstrate remarkable resilience, underpinned by structural reforms and a renewed commitment to sustainable growth,” said Ahmed Attout, director for financial sector development at the African Development Bank.
Out of the 29 countries covered by Absa Group’s latest Africa Financial Markets Index, only 10 saw their scores improve relative to last year.
In contrast, the scores for 11 countries fell, weighed down by weaker market depth, reduced secondary bond trading and new issuances, liquidity challenges, and foreign exchange reforms, which in turn led to a decline in pension fund assets across 19 markets.
The drop is the steepest since 2021, when 19 of the 23 markets surveyed saw their scores slide.
“On a headline basis, the last year may feel like a bit of a disappointment,” Absa Chief Executive Officer Kenny Fihla said in the report on Thursday. “But the detail shows that progress continues to be made across the region, particularly in foreign exchange reforms, improved product diversity, and action on climate change.”
The continent has been buffeted by the uncertainty caused by US trade tariffs as well as conflict in the Middle East and the ongoing war in Ukraine.
That’s tended to overshadow steps African governments have taken to develop their markets.
These include rationalising foreign exchange trading in Nigeria and Uganda, and the launch of Tanzania’s first sovereign sukuk bond. Eighteen of the surveyed economies now offer environmental, social and governance-related instruments or Islamic financial products.
“Africa continues to demonstrate remarkable resilience, underpinned by structural reforms and a renewed commitment to sustainable growth,” said Ahmed Attout, director for financial sector development at the African Development Bank.
