African financial markets have reached their highest average development score in a decade, but limited trading activity continues to restrict their ability to attract investment and provide long-term financing for businesses and infrastructure.
The 2026 Africa Financial Markets Index, compiled by Absa Group and the Official Monetary and Financial Institutions Forum (OMFIF), found that 21 of the 29 countries assessed recorded improved scores as inflation eased, foreign exchange reserves strengthened and regulatory reforms advanced.
The average score rose to 56, the highest since the index was introduced in 2017. The index measures financial market development across areas including market depth, foreign exchange access, transparency, pension fund development, macroeconomic conditions, and legal and regulatory standards.
Despite the improvement, the report warned that progress in regulations and financial products has not consistently translated into stronger trading activity, leaving liquidity a major challenge across the continent.
South Africa Maintains Lead
South Africa retained the top position in the 2026 ranking, followed by Mauritius and Namibia.
Cape Verde recorded the largest improvement, climbing six places to 13th, supported by stronger foreign exchange reserves and sustainable finance initiatives.
Ghana rose four places to sixth as falling inflation, increased stock market activity and improving economic conditions supported its recovery from a debt crisis.
Nigeria and Botswana each dropped two places, ranking eighth and seventh respectively. Nigeria’s performance was affected by weaker foreign exchange access and transparency scores, while rising inflation weighed on Botswana.
Liquidity Remains a Major Challenge
The report identified thin trading as a persistent obstacle to the development of African capital markets.
Although countries have introduced new financial instruments, improved market infrastructure and strengthened regulatory frameworks, these measures have not always generated sufficient buying and selling activity.
Limited liquidity can make it difficult for investors to sell assets quickly without affecting prices. It can also discourage investment and increase the cost of raising capital for businesses and governments.
Deeper markets would allow companies to raise funds beyond traditional bank loans and help channel domestic savings into infrastructure and other long-term investments.
The challenge is particularly important as African businesses seek funding for large projects and expansion plans.
Reforms Expand Investment Opportunities
Over the past decade, African financial markets have made progress in foreign exchange frameworks, legal protections, settlement systems and the range of available investment products.
The 2026 index also highlighted the growing use of sustainable finance instruments and other products designed to meet different investor needs.
These developments have strengthened the ability of some markets to support more complex transactions and manage financial risks. However, the report emphasised that reforms must translate into practical improvements in market activity and investor participation.
Global Risks Could Slow Progress
The improvements come amid uncertainty caused by global trade tensions, conflicts in Ukraine and the Middle East, and elevated energy costs.
These pressures could undermine economic stability, increase financing costs and affect investors’ willingness to commit capital to African markets.
Absa Group chief executive Kenny Fihla said countries needed to strengthen their economic fundamentals to withstand the uncertain global environment.
The index’s revised methodology also means countries are now assessed against fixed benchmarks of good practice rather than ranked solely against one another. Historical scores were recalculated to allow comparisons under the new approach.
The findings suggest that Africa has made measurable progress in developing its financial markets, but the next phase will depend on converting regulatory improvements and new investment products into deeper trading, stronger liquidity and more accessible long-term financing.
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Africa’s Financial Markets Reach Decade-High Scores
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Africa’s financial markets reached a decade-high average score of 56 in 2026, but thin trading and limited liquidity continue to constrain investment and financing.
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