The ninth Annual African Financial Markets Index, launched today by multinational African bank Absa, shows a continent that has remained relatively stable despite tariff and geopolitical turbulence, where ambitious reforms and product diversification compete with declining liquidity and investor caution. The 29 countries covered in the index represent 83% of the continent’s GDP. 

Anthony Kirui, Managing Director, Head of Global Markets, Africa Regional Operations at Absa, told Trade Finance Global (TFG): “The level of improvement is less than we’ve seen in recent years. Clearly, the impact of what’s happening globally is reflected in the scores that we’re seeing.”

South Africa maintained its lead with an overall score of 86, though its market depth pillar score of 98 represented a slight decline from the previous year’s perfect score. The country’s equity market capitalisation stands at nearly three times its GDP at $1.1 trillion, whilst bond market turnover of $2.7 trillion significantly exceeds the regional average of $95 billion.

In the broader picture, 16 of 29 countries experienced declining market depth scores, driven primarily by shrinking market size and reduced liquidity. Outside South Africa, Egypt, and Uganda, bond market activity proved particularly limited, whilst equity turnover ratios declined by 11% year-on-year.

Nigeria’s FX acceleration

Nigeria stands out as perhaps the year’s most dramatic success story in foreign exchange reform (FX). Its Pillar 2 score jumped to 73 from 52, climbing 15 places to fourth position. The Central Bank of Nigeria implemented comprehensive reforms, including unifying various FX windows, clearing a $7 billion FX backlog, and gradually phasing out fiscal-style interventions.

Kirui emphasised the significance of these reforms. “Nigeria consolidated the various windows or FX windows. During that period, also dealt with a significant FX backlog of about $7 billion. That has certainly helped its performance and we anticipate increased interest in the Nigerian market.”

The unification of exchange rates proved particularly crucial. “Nigeria has deliberately aligned the official rate to where the parallel market was deemed to be operating,” Kirui said. “The effect of these parallel markets often denies the official market liquidity and reflects the opinion of the market.” He noted that parallel markets “complicate the ability of local and global institutional investors to participate in these countries and in their markets when a level of disconnect exists.”

The country now holds 6.9 months of import coverage in reserves, up from 5.4 months previously, and inflation has continued its downward trajectory, reaching 18% in recent weeks.

Standout performers

Several economies stood strong in face of headwinds. Malawi jumped from 23rd to 16th place in market depth, thanks to expanded capital market size and increased product diversity. The country now offers the dollar, euro, sterling, and Indian rupee for domestically traded asset classes; in 2024, no foreign currencies were on offer.

Namibia also recorded gains, climbing into the top 10 in market depth and increasing its score by nine points to 47. The country launched a national central securities depository to consolidate and automate securities settlement, whilst also scoring 100 in pension fund development, leading all African nations in this pillar.

Mauritius climbed to third place overall with a score of 76, benefiting from increased financial product diversity following the unveiling of its five-year plan for the financial services sector in July 2025. The Financial Services Commission published new disclosure and reporting guidelines for ESG funds.

Product innovation also brought a tone of optimism across the continent. Tanzania’s government launched its first sovereign sukuk bond in February 2025, building on the country’s inaugural public sukuk in 2023. The seven-year bond aims to fund infrastructure and social development projects. Additionally, Tanzania issued its first Samia infrastructure bond through CRDB Bank, which was oversubscribed by 115%, raising 323 billion Tanzanian shillings against a target of 150 billion.

Kenya approved its first asset-backed security to finance the Talanta Sports Stadium, showcasing how structured finance can support infrastructure projects. 

In sustainability, Egypt continued its leadership in sustainable finance, introducing Africa’s first regulated voluntary carbon market in August 2024. In November 2024, Arab African International Bank (AAIB) raised $500 million by issuing a sustainability bond. Similarly, Botswana launched a Sustainable Bonds Segment and held its inaugural inflation-linked bond auction in February 2025, whilst the Botswana Stock Exchange introduced a 25% discount on listing fees for sustainable bonds.

Finally, inflation trends proved encouraging. “Inflation also moved lower. Notable cases were Egypt, Angola, and Nigeria,” Kirui said. Egypt saw inflation drop to 14.4% from 27.5%, whilst Angola’s fell dramatically to 19.7% from 31%.

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Looking ahead, regional integration emerges as critical for deepening markets. Kirui highlighted the West African Economic and Monetary Union’s recently-launched interoperable instant payment system to facilitate the use of financial services within the region, making cross-border transactions “a lot easier and more efficient”. Making regional markets more accessible through trade and the standardisation and unification of policy frameworks is the focus now. 

As Kirui concluded, what’s “important is your ability to enter as well as to exit these markets and correctly price your assets” – fundamentals that will determine whether Africa can attract the capital needed for long-term development.