Two out of three African countries have not improved or slipped backwards in their ratings among the 29 countries scored in the 2025 edition of the Absa Africa Financial Markets Index (AFMI), now in its ninth year. However, 10 out of 29 countries increased their overall scores, a slowdown from 2024 when 23 countries increased their scores.

Those which scored best have been working on reforms, including to their foreign exchange (FX) environment, and to market depth and liquidity.

Absa bank and independent think-tank the Official Monetary and Financial Institutions Forum (OMFIF), in partnership with the United Nations Economic Commission for Africa (UNECA), research progress in the financial development of 29 of the continent’s leading economies. These represent some 80% of the population and of the gross domestic product (GDP) of Africa.

The AFMI index uses six pillars to score the countries’ financial market progress and performance: #1 market depth, #2 access to foreign exchange (FX), #3 market transparency, tax and regulatory environment, #4 pension fund development, #5 macroeconomic environment and transparency, and #6 legal standards and enforceability. It provides a benchmark for market infrastructure and highlights key areas that policy-makers can work on and also learn from improvements in other African countries. It covers the 12 months to June 2025.

Kenny Fihla, who became Chief Executive Officer of Absa Group in June 2025 (from a distinguished career at Standard Bank), commented: “On a headline basis, the last year may feel like a bit of a disappointment. 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.”

South Africa is top of the table again, with an overall score of 86 out of 100 (down from 88 last year). Next come Mauritius (76), Uganda (66, up from 64), Nigeria (65) and Namibia (64 up from 62).

South Africa topped the table for three of the six pillars (market depth, access to foreign exchange, and market transparency, tax and regulatory environment). Namibia came top for pension fund development, while Botswana placed first for macroeconomic environment and transparency, and Mauritius and South Africa came top for legal standards and enforceability.

Reforms include fintech and FX

Rwanda boosted its score the most in the last year, climbing to 54 out of 100 points overall (from 46). Key improvements include the Capital Markets Authority’s implementation of Rwanda’s National Fintech Strategy and the Fintech Regulatory Sandbox to support innovations in the capital markets. Botswana and Lesotho also saw good increases.

The other countries which improved their scores were Uganda, Namibia, Ghana, Zimbabwe, Angola, the Democratic Republic of the Congo (DRC) and Ethiopia.

The index highlights how countries that focus on reform – especially on tackling inefficient foreign exchange regimes – have weathered the difficult environment better than those that did not change. Nigeria and Uganda led with comprehensive reforms to improve market credibility. The Central Bank of Nigeria is tackling a big investor backlog, fragmentation of FX windows and market operations. The Bank of Uganda focused on liberalizing the FX market, improving interbank liquidity and increasing reporting standards. On the legal environment, several countries introduced legislation to allow netting in settlement.

The Bank of Namibia introduced a central securities depository. Kenya was the second African country to sign IOSCO’s enhanced Multilateral Memorandum of Understanding (MMoU), promising improved global regulatory cooperation. Morocco introduced a futures market and a sovereign sustainability-linked bond framework Ghana added climate stress testing to the financial market frameworks and Uganda integrated ESG compliance into its supervision processes.

Several countries expanded their financial product offerings to attract domestic and foreign investment to the continent. The wider range of products includes Islamic and climate-related finance which helps economies build resilience against global shocks. Tanzania issued its first sovereign sukuk bond in February 2025, which aims to fund infrastructure and social development projects and its first Samia infrastructure bond to finance critical development projects.

• Eighteen AFMI economies offer Islamic financial products or those related to environmental, social and governance (ESG) factors, offering diversification for both short- and long-term investment.
• Despite backtracks on ESG goals globally in the past year, four AFMI countries have issued green bonds for the first time this year, taking the total number to 14.

There was clear progress on taming inflation, which was down in 22 countries, led by Egypt and Nigeria. External debt-to-GDP ratios improved in 16 economies due to tighter fiscal discipline. However, three countries are in debt distress and another five remain at high risk of slipping into it.

Bottom of the table

Ethiopia has not yet managed to climb off the bottom position on the score table, with an overall score of 35, just below Madagascar and the DRC (both scored 36). Cameroon was the largest decline, with its score down to 39 from 42 in 2024, putting it fourth from bottom, and fifth from lowest is Lesotho (40).

It has been a year of difficult macroeconomic conditions globally and the turbulent global trade environment has not benefitted African countries yet. Liquidity is still a big challenge for many countries, for example Cameroon scored only 10 out of 100 on liquidity. Many countries saw falls in the adequacy of their reserves.

Other major challenges highlighted by the index include weakening market depth and a slide in pension fund development.

Roadmap for robust markets and transformation

Claver Gatete, Under-Secretary-General and Executive Secretary of UNECA, said sustaining progress will “require unwavering commitment to transparency, legal certainty and the expansion of domestic institutional investment”,

Ahmed Attout, Director of Financial Sector Development at the African Development Bank, stated: “This year’s index comes at a pivotal moment for Africa. AFMI 2025 is more than a scorecard; it is a roadmap for building robust, transparent and inclusive financial markets to power Africa’s transformation.” He points out “Long-term local currency financing is key to economic development. When the financial sector mobilises domestic resources and allocates them efficiently, everyone benefits – individuals have many options for savings and investments, and the private sector and governments can fund their investment needs. Countries with strong domestic capital markets are better positioned to withstand external shocks, including currency volatility or global interest rate hikes.”

Expectations are up for forecast GDP growth in 22 countries. Ethiopia has the highest projected annual growth rate over the next five years at 7.4%, supported by structural reforms and a focus on investing in infrastructure.

The 2025 AFMI can be downloaded from OMFIF here. We have written about the 2024 report here and the 2023 report here.

The economists and other researchers from Absa, OMFIF and UNECA consulted more than 50 institutions across Africa including central banks, stock exchanges, regulators and market practitioners. Many are listed in the report (page 2).

Fihla’s foreword to the AFMI sums up well: “It’s been a tumultuous year. Globally, armed conflict, sharp moves in asset prices and rapid-fire policy announcements from the new US administration have challenged much conventional economic and geopolitical wisdom. Developments in artificial intelligence and the accelerating impact of climate change all add to a sense that immense change is afoot.

“Africa has an important and positive role to play in this evolving global environment. Whether as a source of critical minerals, arable land, carbon credits or as the world’s last rapidly growing labour force, the continent has much to offer.

“Africa’s continued financial market development is an important link in a chain that connects this global opportunity and the continent’s promise.”

Caption: Nigeria is pushing for improvements in the markets and FX reform (photo of Lagos harbour: Depositphotos)