Uganda holds steady at 4th place in African financial markets index

Uganda has once again secured its fourth position in the Absa Africa Financial Markets Index for 2024, showcasing its strong macroeconomic environment and commitment to transparency. Although trailing behind financial powerhouses like South Africa, Mauritius, and Nigeria, Uganda has outperformed its East African counterparts, including Rwanda, Kenya, and Tanzania, in this prestigious ranking. CNBC Africa recently had an insightful conversation with David Wandera, the Interim Managing Director of Absa Bank Uganda, shedding light on Uganda's financial market prospects and resilience amidst global dynamics. Wandera highlighted several key initiatives that are driving growth and accessibility in Uganda's financial markets. One notable effort is the collaboration between the Bank of Uganda, Capital Markets Authority, and Uganda Securities Exchange to enhance the trading of government securities within the East African region. This partnership aims to attract more retail investors and expand market participation, ultimately bolstering the domestic financial landscape. Additionally, reforms are being proposed to harmonize tax regimes across the East African Community, addressing disparities in tax rates for government securities and promoting market efficiency. Moreover, Wandera emphasized the evolving focus on environmental, social, and governance (ESG) factors in Uganda, with the Ministry of Finance actively developing a taxonomy for national climate financing. Legislative changes, such as exemptions for private equity from income tax and stamp duty, are fostering a conducive environment for investments and signaling Uganda's commitment to fostering a competitive market space. As global economic shifts unfold, Wandera acknowledged the challenges posed by volatile commodity prices, transportation costs, and supply chain disruptions driven by conflicts in various regions. Despite these hurdles, Uganda's financial markets have exhibited resilience, with the Ugandan shilling maintaining stability even amid global currency fluctuations. Wandera expressed optimism about the country's ability to navigate potential interest rate hikes and currency volatility, citing strong export sectors, robust revenue collection, and ample liquidity in the fixed income market as pillars supporting Uganda's economic stability. Looking ahead, Uganda anticipates a relatively stable year from a currency perspective, although concerns loom regarding potential increases in interest rates. As the country remains vigilant in monitoring and adapting to evolving economic conditions, the collective efforts of stakeholders in the financial sector aim to fortify Uganda's position in the African financial markets index and sustain its economic growth trajectory.