African financial markets have made significant progress over the past year, with 21 of 29 countries improving their scores in the 2026 Africa Financial Markets Index, compiled by Absa Bank and think tank OMFIF.Easing inflation, stronger foreign exchange reserves and regulatory reforms have helped deepen markets across the continent, pushing the index to a decade-high average score of 56. However, the report found that expanding financial products and market infrastructure has not consistently translated into greater trading activity, leaving liquidity a persistent challenge.
The index, now in its 10th year, assesses 29 countries on how easily money can be raised and moved, looking at stock and bond markets, access to foreign currency, pension savings, economic conditions and regulation. The improvements reflect a broader trend of market development that can help businesses raise capital and finance infrastructure.
Countries across the continent have benefited from a combination of macroeconomic stabilisation and regulatory reform. The gains suggest that African financial markets are becoming more sophisticated and better equipped to support long-term investment.
Despite the progress, the report’s key warning is that better rules, products and market infrastructure do not automatically create liquidity—the regular day-to-day buying and selling needed to make capital raising efficient. Thin secondary-market liquidity, restricted foreign-exchange access and uneven legal certainty remain obstacles in several jurisdictions.
Bond market activity across the continent thinned during the year, with pension fund assets stagnating. Outside South Africa, Egypt and Uganda, bond trading was particularly subdued due to tighter liquidity and a cautious approach from investors amid global uncertainties.
The report highlights a gap between building market infrastructure and generating actual trading activity. While countries have expanded financial products and improved regulatory frameworks, this has not consistently led to more buying and selling, limiting the ability of businesses to raise long-term capital.
For African policymakers and market participants, the challenge is to convert structural improvements into deeper, more liquid markets. This will require not just better rules and products, but also measures to boost investor confidence, increase participation and improve the flow of capital.
For investors, the improving scores signal a more attractive environment for African capital markets, but liquidity constraints remain a key risk. Thin trading can make it harder to enter and exit positions, potentially deterring some investors despite the broader improvements.
For African economies, the ability to raise long-term capital depends on overcoming the liquidity challenge. If countries can build on the gains in market depth and address the trading bottlenecks, the continent’s financial markets could become more effective at financing growth and infrastructure.
Africa Presents is a Pan-African digital magazine and monthly publication covering politics, business, economy, culture, tech, and the stories shaping Africa and its diaspora. Visit africapresents.com and follow @AfricaPresents for daily coverage and monthly themed magazine editions.
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