Ghana moves up in Absa Africa Financial Markets Index

Ghana has climbed up the Absa Africa Financial Markets Index (AFMI) despite COVID-19 stalling progress across much of Africa, a new Absa report, has said.

The country moved into the top five ranking for the first time in the AFMI, placing fourth with an overall score of 62 out of the maximum 100 score – a recognition of the positive strides in the development of the Ghanaian market.

The performance was an improvement on last years’ sixth position with a score of 59.

“Remarkably, Ghana scored 50 and above in five out of the six pillars measured. The policies and initiatives that contributed to Ghana’s improved performance include – adoption of and enforceability of standard master agreements, improved access to foreign exchange through forward foreign auctions by the Bank of Ghana and market transparency works through daily publication of financial asset prices,” the report, said.

Ghana’s weakest link however, the report said was the capacity of local investors where it recorded a score of 21.

The Absa Africa Financial Markets Index is produced annually by the Official Monetary and Financial Institutions Forum (OMFIF) – an independent think tank for central banking, economic policy and public investment through extensive quantitative research and data analysis in association with Absa Group Limited.

Now in its fifth year, the AFMI throws light on Financial Markets across Africa and evaluates and ranks financial market development in 23 countries, highlighting the opportunities and challenges within the economies.

The aim is to show present positions, as well as how economies can improve market frameworks to bolster investor access and drive sustainable growth. The index assesses countries according to six pillars: Market Depth; Access to Foreign Exchange; Market Transparency, Tax and Regulatory Environment; Capacity of Local Investors; Macroeconomic Opportunity; and Enforceability of Financial Contracts.

Commenting on the report, Absa Ghana’s Managing Director, Abena Osei-Poku said “Expanding and deepening Ghana’s financial markets is vital to our economic development, and it is great to note that Ghana is moving in the right direction with recognizable progress. Ghana’s strong performance across pillars with scores above 50 in five out of the six pillars, shows that stakeholders, led by the Ministry of Finance and the Bank of Ghana have sustained development initiatives through the COVID-19 period”. 

The Director and Head of Global Markets of Absa Ghana and Nigeria, Kobla Nyaletey, noted that “to score full marks of 100 on the pillar of Enforceability of Financial Contracts signifies the quantum and speed of work by stakeholders in the last few years in adopting ISDA, GMRA to underpin financial market transactions and the formal recognition of netting in the new Corporate Restructuring and Insolvency Act 2020 (Act 1015). Market participants now need to appropriately reflect this in pricing via a risk adjusted pricing framework. I look forward to similar speedy reforms in other areas, especially in enhancing the capacity of local investors to sustain Ghana’s upward climb on the index in the coming years.”

BY KINGSLEY ASARE

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