12 Dec 2023

 Botswana is ranked sixth out of 28 countries in this year’s ABSA Africa Financial Markets Index, making the country suitable to attract both local and foreign direct investment.

Minister of Finance, Ms Peggy Serame said this during the official launch of the 2023 ABSA Africa Financial Markets Index held in Gaborone on Monday.

Minister Serame said the ABSA Africa Financial Markets Index was a valuable tool for measuring the state and robustness of financial markets across African countries.

She said the index also provided insights on development and integration of financial markets across Africa, adding that it was essential to have a comprehensive understanding of the progress being made in this area, as financial markets played a critical role in promoting economic growth and development.

She added that now in its seventh year, the ABSA Africa Financial Markets Index was a toolkit for evaluating the financial development of surveyed countries based on measures of market accessibility, openness and transparency.

“The aim is to show how African economies can reduce the barriers to investment, which can, in turn, boost sustainable growth. 

It is pleasing to note that more countries on our continent are seeing the value of the ABSA Africa Financial Markets Index as evidenced by the expansion of participating countries to 28 this year,” she said.

Ms Serame said over 40 indicators were considered across six pillars, which included market depth, access to foreign exchange, market transparency, tax and regulatory environment as well as capacity of local investors, macro-economic environment and transparency and legal standards as well as enforceability.

“These pillars are pivotal to the strength of financial markets locally and each one signifies a facet that calls for collective commitment to building a resilient financial ecosystem,” she added.

She said Botswana’s third pillar on market transparency, tax and regulatory environment score improved by nine points this year as it implemented new measures on such front.

“For example, in July, the Botswana Stock Exchange approved a 25 per cent discount on initial listing fees for sustainable bonds,” she said.

She added that Botswana and Uganda continued to lead in the fifth pillar on macro-economic environment and transparency with scores of 87 and 86 respectively, up one point from last year.

“The two countries scored highly on transparent fiscal and monetary policy decisions, as well as timely data releases for key macroeconomic variables,” she said.

Ms Serame said Botswana relatively had low ratios for non-performing loans and external debt, particularly where external debt was 10 per cent of the Gross Domestic Product.

That, she said demonstrated the financial discipline and prudence as driven by economic agents and regulators.

She further said despite an overall improvement in the country’s ranking, Botswana scores had declined in four of the six pillars this year, particularly the sixth pillar on legal standards and enforceability.

“This pillar serves as a reminder of the importance of a robust legal framework in fostering investor confidence and market integrity. 

Moreover, it indicates the country’s dedication to building a financial environment where rules are not only in place, but are enforced with unwavering commitment,” she said and therefore pleaded with industry players to up their game to improve the four pillars.

Meanwhile, ABSA Bank interim board chairperson, Mr Cosmas Moapare said the report should serve as a roadmap, guiding industry players toward targeted improvements in Botswana’s financial markets.

Mr Moapare said market players across sectors had to collaborate to implement strategic reforms toward greater transparency, efficiency, and accessibility.

“By so doing, we can position Botswana as a regional financial hub, attracting both domestic and international investors,” he said.

Mr Moapre said in ABSA market, players had a willing and capable partner who was ready to play their part in improving configuration of the financial markets through provision of suitable banking solutions. ENDS