East Africa: The 2023 financial markets outlook

The African capital markets infrastructure has seen continuous improvements across the continent, despite facing macroeconomic headwinds. A recent interview on CNBC Africa delved into the opportunities, challenges, and outlook for the region's financial markets with key experts, David Wandera, Executive Director & Head of Markets at ABSA Uganda, and Anthony Kirui, Head of Global Markets at ABSA. The discussion focused on the ABSA Africa Financial Markets Index, particularly in East Africa. The index revealed positive trends in the region, indicating growth and development in the financial markets. Uganda led the way with a significant improvement in its score, followed by Kenya and Tanzania. This improvement was attributed to factors such as market depth, better access to foreign exchange, and increased market transparency. The performance in East Africa reflected greater diversity and inclusion of ESG-related products and initiatives. David Wandera highlighted the role of digital innovations in enhancing financial penetration in Uganda. Initiatives such as the Oklahoma saving project and the digitization of account opening processes have contributed to increased financial inclusion in the country. On the other hand, Anthony Kirui emphasized the importance of product diversification for the region, pointing out that there is room for improvement in offering a variety of financial products to investors. The interview also touched upon the challenges facing the African financial markets, including debt issues and climate risks. Kirui mentioned that several countries in the region had sought support from the IMF due to debt distress. He highlighted the importance of deepening local debt markets through international legal documentation and transactions. David Wandera echoed concerns about global factors impacting capital flows in Uganda and emphasized the significance of commodity prices for the country's exports, particularly in agricultural sectors such as coffee, tea, flowers, and fish. Looking ahead, the experts identified potential risks and trends that could define the capital markets for the financial year. They emphasized the need for collaboration between the private sector and local regulators to ensure vibrant and resilient financial markets in the region. Despite challenges, the outlook for East Africa's financial markets appears promising, with ongoing efforts to enhance market depth, transparency, and inclusivity.