By Jonathan Ntege Lubwama
- Uganda has overtaken Kenya in key pillars of Africa’s capital markets growth
- The International Monetary Fund predicts Uganda could reach middle-income status by the 2026-2027 financial year
Nairobi, Kenya has been the financial capital of Eastern Africa for a long time, fueled by its $110 billion economy and $16 billion market capitalization. However, this could change, with the emergence of its smaller western neighbor, Kampala, Uganda, according to the 2022 Absa Africa Financial Markets Index.
Why This Matters: Uganda performed better than its regional rivals in three pillars of the capital markets growth as per the report. These included the growth of foreign exchange markets, macroeconomic opportunities, and enforceability of standard master agreements. It has achieved a financial markets score of 57, which is better than its rivals Kenya (47), Tanzania (45) and Rwanda (43).
Uganda’s economy has also grown at 46% in 2022 which is faster than World Bank predictions. The International Monetary Fund also predicts that Uganda could reach middle-income status by the 2026-2027 financial year, if the country implements the necessary reforms. Income per capita is expected to grow from $812 to at least $1,180.
What’s Next: It remains to be seen if Kampala will surpass Nairobi. For starters, Uganda has a GDP of $40 billion, which is less than half of Kenya’s ($110 billion) and over $20 billion less than Tanzania’s ($67 billion). It also has a smaller market with only 18 firms listed with a market capitalization of $5.6 billion, compared to its regional rivals, Kenya (64 listed firms and market cap of $16.7 billion) and Tanzania (28 listed forms and a market capitalization of $6.8 billion). Both Kenya and Tanzania also trounced Uganda in the capacity of local investors.
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