After making different reforms over the recent years, for example the introduction of the interest rate cap, Kenya’s financial market has finally been acknowdeleged for its works after it was ranked position 5 out of 17 other African countries by the Africa financial markets index.
The index, which is done by Barclays Africa and the Official Monetary and Financial Institutions Forum, (OMFIF) ranked South Africa as the country with the best financial market as it had a score of 92%. It was followed respectively by Mauritius 66%, Botswana 65%, Namibia 62% and then Kenya, which had a total of 59%.
The index was based on measuring six pillars of financial markets; access to foreign exchange, depth and breadth of financial instruments, as well as market transparency and regulation. However, this was not all that was considered as the index further looked into macroeconomic opportunity, legality and enforceability.
According to Jeremy Awori, managing director Barclays Bank of Kenya, the Index provides countries with valuable insights and tools to improve the state of their financial markets.
“By broadening and deepening their understanding of the requirements of local and international investors, Africa’s leaders can develop robust markets – a prime condition for sustainable, inclusive growth,” he said.
According to the report, Kenya was able to get the highest rating and outpace its neighbouring countries in the East African region. Other countries in the region, which were part of the index included Uganda, which was ranked 10, Tanzania – 11, Rwanda – 8 and Ethiopia – 17.
Kenya came out on top because of its strong contract enforcement policies which made it stand out as well as being ahead of the other countries in the region in terms of market depth and capacity for local investors. On the other hand, Ethiopia whose economy is growing to rival Kenya’s came in at the last position due to the lack of a securities exchange, minimal local investor capacity and low enforceability of contracts.