oluwatosin oyeniyi JOHANNESBURG, South Africa — African financial markets are showing signs of progress, with 21 of 29 countries recording higher scores in the 2026 Africa Financial Markets Index. However, limited trading activity continues to restrict investment opportunities and the ability of businesses to raise capital.
The index, compiled by Absa Group and the Official Monetary and Financial Institutions Forum (OMFIF), found that the average score reached 56, its highest level in the report’s 10-year history. Easing inflation, stronger foreign exchange reserves and regulatory reforms contributed to improvements across several markets.
South Africa retained first place, followed by Mauritius and Namibia, while Cape Verde recorded the largest improvement, rising six positions to 13th. Ghana also advanced, climbing four places to sixth.
Nigeria and Botswana, meanwhile, each fell two positions, placing eighth and seventh respectively. Their declines highlight how uneven financial-market development remains across the continent, even as the overall results point to progress.
South Africa Leads as Cape Verde Makes Gains
South Africa maintained its position at the top of the index, supported by deep and relatively liquid capital markets, a broad range of financial products, developed market infrastructure and participation by institutional investors.
Mauritius remained among the strongest performers, benefiting from an open financial system, established market infrastructure and comparatively developed legal and regulatory arrangements. Namibia’s position reflects, among other factors, the scale of its pension industry relative to its economy.
Cape Verde was the biggest mover in the 2026 edition, advancing six places to 13th. The improvement was linked to stronger foreign exchange reserves and new sustainable-finance initiatives.
Ghana’s four-place rise to sixth reflected declining inflation, stronger stock-market activity and improving economic conditions following its debt crisis.
These results illustrate that financial-market performance depends on several factors working together. Regulatory reforms can improve investor confidence, while macroeconomic stability and a wider range of investment products can make markets more attractive to businesses and investors.
Nigeria and Botswana Lose Ground
Nigeria and Botswana each dropped two places in the rankings, although the factors behind their declines differed.
Nigeria fell to eighth, with weaker scores for access to foreign exchange and market transparency weighing on its performance. The result comes despite reforms to its financial-market infrastructure, including changes to the valuation of fixed-income collective investment schemes and the introduction of a commercial-paper listing and trading platform.
Botswana dropped to seventh, with rising inflation identified as a factor affecting its results.
Their experiences underline an important distinction: reforms and financial-market activity do not automatically translate into improvements across every measure of market development. Macroeconomic conditions, access to foreign currency, transparency and the depth of trading all influence how effectively a market can serve investors and businesses.
The index also uses a revised methodology in its 10th edition, assessing countries against fixed benchmarks of good practice rather than comparing their performance only with one another. Historical scores were recalculated to allow comparisons under the new approach.
Why Market Liquidity Matters
Despite improvements in the overall scores, liquidity remains one of the continent’s central financial-market challenges.
Market liquidity refers to how easily investors can buy or sell financial assets without causing significant changes in their prices. In markets with limited trading, investors may struggle to find buyers or sellers when they need to exit an investment. This can increase transaction costs and discourage participation.
Thin trading also affects businesses and governments seeking to raise money through shares and bonds. A market may have the rules and infrastructure needed to list securities, but if few investors trade those assets, it may not provide companies with reliable access to capital.
The index found that broader financial products and improved market infrastructure had not consistently translated into stronger trading activity. This gap limits the ability of markets to channel savings into businesses, infrastructure and other long-term investments.
Addressing the problem requires more than creating new financial instruments. Policymakers and market operators must also encourage participation by domestic institutional investors, pension funds, retail investors and international capital providers, while maintaining transparent rules and credible oversight.
Regional Integration Could Expand Investment
The findings also raise questions about how African markets can attract and retain more investment within the continent.
Many national exchanges operate within relatively small markets, with different regulations, settlement systems and procedures for cross-border investment. These differences can make it difficult for investors in one African country to purchase securities in another.
Greater integration could widen the pool of potential investors and make it easier for companies to access financing beyond their domestic markets. However, progress depends on compatible regulations, efficient settlement infrastructure, reliable disclosure and investor confidence.
Nigeria’s ongoing fundraising efforts, including the proposed public offering of shares in the Dangote refinery, illustrate the scale of capital that African businesses may seek from retail and institutional investors. Yet expanding access to such opportunities across borders remains a challenge.
The index’s findings suggest that financial-market development should be judged not only by a country’s ranking but also by whether its markets can mobilise savings, support productive investment and give businesses dependable access to funding.
Sustaining Progress Beyond the Rankings
The 2026 results provide evidence of gradual improvement in African financial markets, with higher scores across most of the countries assessed and the average reaching a decade high.
But the persistence of low liquidity shows that progress in regulation, macroeconomic stability and financial infrastructure must be matched by deeper investor participation and more active trading.
For governments and regulators, the next phase involves strengthening transparency, improving access to foreign exchange, expanding investment opportunities and building confidence in local markets. Regional cooperation could also help reduce barriers that prevent capital from moving efficiently across borders.
The challenge is to turn improved scores into markets that work more effectively for businesses, investors and the wider economy. Africa’s financial markets are making progress, but their capacity to finance sustainable growth will depend on whether that progress translates into more accessible, liquid and interconnected markets.
