Times Of Swaziland: BEST PLACE FOR BUSINESS: ESWATINI IN TOP 20

BEST PLACE FOR BUSINESS: ESWATINI IN TOP 20
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BY ASHMOND NZIMA on 18/10/2021 09:06:00


MBABANE – Eswatini has maintained in its 15th place in the ABSA Africa
Financial Markets Index.
The index, produced by the Official Monetary and Financial Institutions Forum
(OMFIF) and sponsored by ABSA, records the openness and attractiveness of 23
countries across the continent to foreign investment based on six pillars. These
are market depth; access to foreign exchange; market transparency, tax and
regulatory environment; capacity of local investors; macroeconomic opportunity;
and legality and enforceability of standard financial markets master agreements.
While the overall average score for the country has dropped from 49 to 39; the
15th place has been maintained due to what has been dubbed growth in foreign
exchange reserves.
“Out of 23 countries in the index, 19 score lower than last year. This decline
reflects more difficult market conditions, methodological changes and the
inclusion of environmental, social and governance indicators in the index.
Despite the fall in scores, few examples reveal an underlying deterioration in
the policy, regulatory or developmental environment in any of the index
countries,” highlighted the report shared by ABSA. South Africa, Mauritius and
Nigeria maintain their lead in the index, though with scores slipping in 2021
for all three.
Ghana and Uganda enter the top five for the first time, both earning points for
progress in enforceability of standard master agreements. Average scores
declined to 46.4 from 50.8 last year, with only seven countries earning above
50. Malawi, Egypt and Uganda are among the countries that improved their ranking
the most. Advancements in establishing the enforceability of global contractual
frameworks lift Malawi’s and Uganda’s scores. Reforms in Egypt continue to
boost its macroeconomic prospects, and its management of reserves has ensured
its ability to meet foreign currency demand.
Challenging
While challenging market conditions affected country scores, most drops are
attributed to methodological changes adopted to better reflect country
performance and evolving trends in financial markets. The index, now in its
fifth year, benefits from continued engagement with policy-makers, regulators,
market participants and industry experts providing the latest information about
developments in the region. As part of its aim to encourage progress, this
year’s index introduces new indicators that acknowledge the role of
sustainable finance in expanding capital markets and achieving broader
socio-economic goals.
The introduction of sustainability-focused indicators weighs down scores,
especially for countries at a much earlier stage of market development. However,
as with all indicators used across the index, the new measures serve as targets
for countries to work towards. In addition to a stronger, forward-looking focus
on sustainability and green finance, the index recognises the role of digital
technology and innovation in future-proofing Africa’s financial markets. The
report highlights countries’ efforts to upgrade market infrastructure and
regulatory support for the development of technology-based tools.
While these initiatives do not directly impact scores, they demonstrate how
countries can use innovation to boost local markets and build a broader investor
base.
Sought for his reaction, Minister of Commerce, Industry and Trade Manqoba
Khumalo expressed his delight on maintaining the ranking in the middle of a very
difficult environment for business.
“Unfortunately we have not been able to advance many of the initiatives we had
started two years ago due to COVID-19 restrictions but we have also improved on
a number of aspects, which I’m confident resulted in us not sliding down. We
continue to see a strong pipeline of potential investors and as COVID-19
subsides, we believe these prospects will be converted to projects on the
ground,” said the minister.
Meanwhile, African markets are said to have endured a second difficult year,
with illiquid markets continuing to dampen index scores amid the COVID-19
pandemic. “Innovations in sustainable finance and digital transformation could
be key to reinvigorating markets and important initiatives are underway across
markets in these areas,” shared the report.
Since its launch in 2017, the Absa Africa Financial Markets Index has shone a
crucial light on the opportunities for investment in region. As Africa looks to
build back better after the COVID-19 crisis, the fifth edition of the index,
compiled by OMFIF, is more important than ever. It is a vital part of
policy-makers’ and market participants’ toolkit in this process and a
benchmark for international investors looking to commit to the region.
Markets
Recent progress in building robust financial markets in the region helped many
countries withstand the economic shock, but it also revealed that there is still
a lot more room for improvement. Countries’ immediate need for resources to
support fiscal policies during the crisis and the rapid withdrawal of
international capital emphasised the importance of building local markets with
sufficient depth and liquidity to withstand external shocks. The events of the
past two years also heightened awareness of climate change, and the power of
capital markets can be harnessed to achieve efforts to combat it. As a result,
this year’s pillars incorporate indicators that gauge how financial markets in
the region are incorporating sustainability considerations.