Blog: Uganda leads EAC in ease of forex access

Uganda leads EAC in ease of forex access


Kampala- Uganda leads the rest of East Africa in ease of access to foreign exchange, according to the 2019 Absa Financial Market Index.
The country, according index, scored 70 out of 100 points compared to Rwanda’s 66, Kenya’s 65 and Tanzania’s 60. Burundi was not surveyed.
Access to foreign exchange continues to be a pillar growth across the African continent.

The Absa Africa Financial Markets Index evaluates financial market development in 20 countries, and highlights economies with the clearest growth prospects.

The index seeks to position how economies can improve market frameworks to meet yardsticks for investor access and sustainable growth.
Presenting findings of the index in Kampala yesterday, Mr Jeff Gable, the Absa chief economist said: “Uganda performs strongly … with almost the same score as top-ranked South Africa. It has a high level of foreign reserves relative to net portfolio investment flows and enough reserves to cover more than four months of imports.”

Interbank foreign exchange turnover used as a measure of foreign exchange liquidity, he said was $20m in the year to June 2019, one of the highest in the index.

Mr Gable said Uganda has enough foreign exchange reserves to cover its portfolio flows with net portfolio investment in 2019 standing at $97m, which is low relative to reserves of $3.4 billion.

Easily accessible
According to the findings of the index, survey respondents said foreign exchange was easily accessible but the study noted that Uganda could score more points by adopting the Global Foreign Exchange Code of Conduct.

In another area of study – tax, market transparency, and regulatory environment – Uganda was ranked ninth out of 20 countries.
In the current budget, the government reduced duty on withholding tax, according to the Absa Head of Markets David Arthur Wandera, which saw Uganda score better than other countries.
“Withholding tax on infrastructure bond interest payments was removed entirely. Uganda’s score is supported by the use of international accounting and reporting standards and a strong corporate action,” he said, noting that the good scores have attracted progressive corporate credit ratings from international agencies such as Moody’s, Fitch and Standard & Poor, among others.

On financial reporting, Wandera said financial reporting by corporates was rated as good and transparent by survey respondents, contributing to Uganda’s good standing.

He also noted that key capital market reforms have given Uganda a good chance of a higher ranking in future.

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