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Kenya Jumps Over South Africa in Financial Market Rankings

Author 3 years ago

By Moses Adongo

Kenya has displaced South Africa to rank as the best financial market in Africa regarding attractiveness to foreign investors due to its more natural foreign exchange capital regime.

This improvement is based on an index report prepared by the Absa Group and Official Monetary and Financial Institution Forum (OMFIF).

The report, which is OMFIF’s second edition of the ‘Absa Africa Financial Markets Index,’ made particular considerations for the rankings; tax and regulatory environment, macroeconomic opportunity, market depth, market transparency, access to foreign exchange and the legality and enforce-ability of standard financial markets master agreements.

According to the report, Kenya scored 93 on a scale of 1 to 100 points, to overtake South Africa that scored 91 points.

“Kenya earns the highest marks in this pillar, a significant improvement from ranking sixth last year. The relaxation of capital controls boosted its performance, as did improvement of the country’s net portfolio flows to reserves ratio,” revealed the Absa report.

However, the reports ranked Kenya third (65) behind South Africa and Botswana which scored 93 and 65 points respectively when all the six metrics were considered.

According to the report, investors believe that the exchange rate regime and degree of openness to the capital flow are significant factors in shaping the foreign investment environment.

The index further revealed the attraction Kenya has on investors who find it is easier to access foreign exchange in the country. It also shows that only South Africa was ahead of Kenya in regards to the continent’s markets where foreign investors had high ability to deploy and repatriate capital.

The report, however, advises central banks to observe good reserve management strategies to avoid risks of capital outflows.

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