KAMPALA, October 15, 2026 — Uganda has emerged as the strongest-performing financial market in East Africa among the economies assessed in the 2026 Absa Africa Financial Markets Index [AFMI], outperforming Kenya, Tanzania and Rwanda and ranking fourth overall on the African continent.
Uganda scored 68 points out of 100, placing it behind only South Africa, Mauritius and Namibia among the 29 African economies covered by the index. Its score was one point higher than the previous year’s revised score of 67.
The result puts Uganda three points ahead of Kenya, which scored 65, six points above Tanzania at 62, and 13 points ahead of Rwanda at 55. The Democratic Republic of Congo [DRC], another East African Community [EAC] member assessed by the index, scored 47.
The performance is particularly significant because Uganda’s overall score is 12 points above the 56-point average for the 29 economies covered by the index. The report says the continental average is the highest recorded in the index’s 10-year history, having risen six points since its launch in 2017.
But Uganda’s position also reveals a striking contradiction: the country has one of Africa’s strongest macroeconomic and foreign-exchange environments, yet its domestic capital markets remain relatively shallow. This suggests that Uganda has built a relatively strong foundation for financial-market stability and investor confidence, but has yet to translate that foundation fully into deep, liquid markets capable of mobilising large volumes of long-term domestic capital.
Uganda’s biggest advantage is macroeconomic stability
Uganda’s strongest performance comes from the macroeconomic pillar, where it scored 96 points, the highest score among all 29 economies assessed.
The report says Uganda maintained a strong performance across all four indicators in the pillar and achieved a perfect score for external debt. It attributes the country’s positive outlook partly to strong economic growth and commercial oil production, while identifying weather shocks and external price volatility as important vulnerabilities.
Uganda’s five-year projected growth rate is 7.1 per cent, placing it second among the AFMI economies, behind Ethiopia’s 8.4 per cent and ahead of Rwanda’s 7 per cent. The report links Uganda’s outlook to commercial oil production and regional integration, as well as efforts under its Tenfold Growth Strategy to promote agro-industrialisation, tourism, mineral development, and science, technology and innovation.
This gives Uganda an important advantage over several African economies where high inflation, debt distress or weak economic growth continue to constrain financial-market development.
The report notes that all 29 AFMI economies recorded stronger GDP-growth scores, while inflation declined in 20 countries and external debt relative to GDP improved in 20. However, Zimbabwe, Malawi and Ethiopia remained in debt distress.
Uganda therefore enters the next phase of financial-market development from a comparatively favourable macroeconomic position.
Foreign exchange is Uganda’s other major strength
If macroeconomic conditions provide the foundation, Uganda’s foreign-exchange market is arguably its most impressive financial-market achievement.
Uganda scored 81 points in access to foreign exchange, an improvement of 12 points, the largest increase recorded under this pillar. The country returned to second place in Africa, behind South Africa’s 90 points.
Kenya scored 74, Tanzania 60 and Rwanda 56, meaning Uganda had a substantial lead over its main EAC competitors.
The report attributes Uganda’s performance to its market-based and liberalised foreign-exchange regime, prudent macroeconomic management and measures designed to deepen liquidity.
One of the most significant developments has been the introduction and increased use of foreign-exchange swaps. According to the report, annual FX-swap turnover rose 168 per cent, from US$ 10.3 billion in June 2022 to US$ 27.5 billion in June 2026.
At the same time, Uganda’s gross international reserves increased by 64 per cent, from $4.1 billion in June 2022 to $6.7 billion in June 2026. The increased reserves and improved FX liquidity have strengthened the country’s ability to absorb external shocks while maintaining a flexible exchange rate.
This is an important distinction between Uganda and many African economies that have struggled with foreign-currency shortages, exchange-rate instability and restrictions on access to foreign exchange.
However, the report identifies reserve adequacy as Uganda’s weakest indicator within the FX pillar, despite its otherwise strong performance. That suggests that the country’s FX position, although considerably stronger, still needs continued accumulation of buffers without undermining the openness of the market.
The weakness: Uganda’s capital market remains shallow
The biggest warning sign in Uganda’s performance is its 47-point score for market depth.
This places Uganda ahead of Rwanda’s 38 points but only marginally above Kenya and Tanzania, both of which scored 43. By contrast, South Africa scored 92, Egypt 59, Nigeria 56, Mauritius 56, Botswana 53 and Namibia 52.
The implication is clear: Uganda has created a relatively stable and accessible financial environment, but its domestic capital market is still not sufficiently large, liquid or diverse.
The AFMI defines market depth in terms of the size and liquidity of domestic equity and bond markets, diversity of listed assets and the existence of structures that support deeper trading. The report says that although conditions improved in most African markets, liquidity remains a central constraint, with countries needing sustained growth in securities turnover and a wider range of actively traded products.
For Uganda, the challenge is therefore no longer simply creating financial-market infrastructure. It is getting more investors and issuers to use that infrastructure more actively.
This is crucial for an economy seeking to finance infrastructure, industrialisation, energy projects and private-sector expansion without relying excessively on commercial bank lending or government borrowing.
Kenya still has the deeper and more transparent market
Uganda’s overall lead in East Africa should not be interpreted as meaning that it dominates Kenya in every aspect of financial-market development.
Kenya remains stronger in several areas that matter for a sophisticated capital market.
Its market-depth score of 43 is below Uganda’s 47, but Kenya recorded a perfect 100 in market transparency, tax and regulatory environment, compared with Uganda’s 87. Kenya also scored 76 in legal standards and enforceability, against Uganda’s 69.
Kenya’s financial-market advantage is therefore less about macroeconomic conditions or FX access and more about the infrastructure, transparency and legal environment supporting market participation.
The report also highlights Kenya’s record-high bond-trading volumes and its listing of the country’s first dollar-denominated security during the review period.
This presents an important lesson for Uganda. Strong macroeconomic performance can attract investors, but deep capital markets ultimately require a broad investor base, active secondary-market trading, diverse securities, strong legal protections and predictable disclosure.
Tanzania is closing the gap
Tanzania ranks below Uganda but is showing significant momentum.
Its overall AFMI score rose to 62 from 60, placing it ninth in Africa. Tanzania’s market-depth score of 43 is below Uganda’s 47, while its FX score of 60 is considerably lower.
However, Tanzania has a strong 85-point score for market transparency, tax and regulatory environment, compared with Uganda’s 87. Its macroeconomic score is also a strong 85, although well below Uganda’s 96.
Tanzania’s pension-fund development score of 35 is also higher than Uganda’s 28.
The report highlights Tanzania’s money-market reforms, heavily subscribed bond issues and launch of its first exchange-traded funds as important developments during the year. It also says Tanzania implemented a climate-related financial-risk framework requiring banks to conduct regular climate scenario analysis and stress testing.
Tanzania therefore presents a different model from Uganda: its overall financial-market score is lower, but some of the institutional mechanisms needed for deeper markets are advancing rapidly.
Rwanda’s smaller market shows the limits of scale
Rwanda scored 55 points, ranking 16th in Africa. Its market-depth score was only 38, while its FX score was 56.
Yet Rwanda performed strongly on legal standards and enforceability, scoring 81, compared with Uganda’s 69. It also recorded a transparency and regulatory score of 70.
Rwanda’s financial-market reforms included Islamic finance rules, a new private-market board and a multi-currency securities segment. Its stock exchange also joined the World Federation of Exchanges.
The contrast with Uganda is revealing. Rwanda has made significant institutional and regulatory advances despite a smaller market, while Uganda benefits from a larger economy and stronger macroeconomic and FX conditions.
For Uganda, the Rwandan experience demonstrates that regulatory innovation and market architecture can progress even before a country has achieved substantial market depth.
Uganda’s pension-market weakness is becoming more apparent
Perhaps the most concerning structural weakness is the country’s pension-fund development score of just 28.
Uganda is ahead of Rwanda, which scored 24, but behind Kenya at 30 and Tanzania at 35.
More importantly, Uganda is far behind countries such as Namibia and Eswatini, which both scored 100, and Seychelles at 68.
This matters because pension funds are among the most important potential sources of long-term domestic capital.
The AFMI report says pension assets across the 29 economies increased by nearly US$ 70 billion, or 24 per cent, during the year, the largest annual increase in at least four years. Kenya, Nigeria and Morocco were among the countries contributing significantly to that growth.
Uganda’s relatively low pension-market score therefore represents a missed opportunity.
A stronger pension system could provide a deeper pool of patient domestic capital for government bonds, corporate bonds, infrastructure projects and equities, while reducing dependence on short-term financing and external capital.
The challenge is not merely to increase pension assets. It is also to ensure that institutional investors have sufficient domestic financial instruments in which to invest.
Uganda’s transparency framework is strong, but not yet best in East Africa
Uganda scored 87 on market transparency, tax and regulatory environment.
That is a strong result by African standards and puts Uganda among the continent’s better-performing markets. However, Kenya’s perfect score of 100 and Tanzania’s 85 show that Uganda still has room to improve.
The report specifically notes Uganda’s planned central data hub and data-accessibility platform as part of the continent-wide move towards making financial and macroeconomic information easier for investors to access and use.
This distinction between publishing information and making it usable is increasingly important.
For Uganda to move from being a strong regional market to a genuinely deep financial centre, investors need timely, consistent and easily accessible information on government securities, companies, monetary policy, foreign exchange and macroeconomic conditions.
Legal and regulatory standards remain another area for improvement
Uganda’s score of 69 for legal standards and enforceability is respectable, but it lags Rwanda’s 81 and Kenya’s 76.
Tanzania, at 65, is slightly below Uganda.
This suggests that Uganda has built a relatively strong regulatory environment, but the effectiveness and enforceability of the legal framework can still be strengthened.
This is particularly important for derivatives, securities lending, repo markets, insolvency procedures, investor protection and cross-border investment.
The AFMI’s broader conclusion is that internationally recognised master agreements, clear legal opinions, regulatory co-operation and common reporting standards can reduce legal and informational barriers and make cross-border investment easier.
For Uganda, stronger legal certainty could therefore help convert its excellent FX performance and strong macroeconomic position into greater international investor participation.
Uganda’s climate-finance challenge
Uganda is also at an important crossroads on sustainable finance.
The AFMI says 19 of the 29 economies reported environmental, social and governance initiatives, while 11 had implemented climate stress testing. Tanzania is among those that have already introduced climate stress testing.
Uganda, however, has not yet carried out a climate stress test, although the analytical framework needed to support such testing is being established at the Bank of Uganda.
That creates both a vulnerability and an opportunity.
Uganda’s economy remains highly exposed to weather-related shocks, a vulnerability explicitly identified by the report. At the same time, climate-resilient infrastructure, green bonds and other sustainable-finance instruments could provide new sources of long-term investment.
Uganda will therefore need to move from establishing the analytical framework to actually testing the resilience of its financial institutions and developing credible instruments for financing climate adaptation.
Uganda’s position in Africa is stronger than its market size suggests
The most striking feature of Uganda’s 2026 AFMI performance is that it sits above several much larger African economies.
Uganda’s 68 points put it ahead of Ghana and Botswana at 64, Nigeria at 63, Tanzania at 62, Morocco at 60 and Egypt at 58.
Only South Africa, at 85, Mauritius at 77 and Namibia at 71 rank above Uganda.
This is significant because Uganda does not possess the financial-market scale of South Africa, the international financial-centre characteristics of Mauritius or the pension-market strength of Namibia.
Its ranking is instead being driven by the combination of strong macroeconomic conditions, FX-market openness, improving financial infrastructure and regulatory reforms.
That combination gives Uganda an unusually strong platform from which to build.
But Uganda must now move from stability to depth
The central question for Uganda is whether it can turn its current strengths into a much deeper domestic capital market.
The AFMI report makes a broader distinction that is particularly relevant to Uganda: market expansion is not the same as market development.
African countries have increased the amount of securities being issued, but greater issuance has not always produced sustained secondary-market activity. Liquidity remains a constraint in many economies, while debt vulnerabilities continue to limit policy space.
For Uganda, this means the next stage should not simply be about issuing more government bonds.
It should be about building an ecosystem in which government and corporate securities are actively traded; pension funds and other institutional investors have a wider range of assets; companies can raise long-term capital through the stock exchange and bond market; derivatives markets can expand; and foreign investors can enter and exit efficiently.
The extension of Uganda’s government-bond yield curve to 25 years is an important step in that direction. The country also introduced FX swaps for monetary-policy operations, while foreign reserves rose by more than 50 per cent during the period highlighted in the report.
But these instruments will have their greatest developmental impact only if they stimulate broader participation and secondary-market liquidity.
Regional integration could be Uganda’s biggest opportunity
Uganda’s relatively small domestic market is one reason regional integration matters.
The AFMI report argues that many African national markets are simply too small to generate the scale, liquidity and diversity required to mobilise long-term capital effectively. Stronger regional integration can widen the investor base, reduce fragmentation and create markets capable of financing large projects.
Uganda itself is already pursuing this direction.
The report cites the African Exchanges Linkage Project and the East Africa and Horn of Africa Capital Markets and Payment Systems Integration Project as initiatives that could open cross-border investment and attract international investors.
This could prove decisive.
Rather than trying to build a financial market entirely on the scale of South Africa within Uganda’s borders, Uganda could position itself as part of an integrated East African market in which investors can access a larger pool of securities and businesses can raise capital across national boundaries.
The wider African lesson
Uganda’s performance also reflects a broader transformation in African financial markets.
The 2026 AFMI found that 21 of the 29 countries improved their overall scores, while the continental average reached 56, the highest level in the index’s decade-long history. The report also found improvements in financial-product diversity, sustainable finance, foreign-exchange reserves, transparency and digital financial access.
The leading markets illustrate different routes to financial development.
South Africa remains dominant because of its enormous market scale, liquidity, sophisticated infrastructure and institutional investor base.
Mauritius combines macroeconomic stability, regulation, innovation and international connectivity.
Namibia benefits from exceptionally strong pension-market development and improving market infrastructure.
Kenya has built a comparatively sophisticated and transparent capital-market ecosystem.
Ghana’s rapid improvement shows what macroeconomic stabilisation and renewed investor confidence can achieve, while Tanzania demonstrates the potential of market reforms and institutional investment.
Uganda’s model is different: its greatest assets are macroeconomic strength and FX-market performance.
Its greatest challenge is turning those strengths into market depth, pension mobilisation and greater private-sector capital formation.
What Uganda needs to do next
The AFMI findings suggest five broad priorities for Uganda.
First, deepen the domestic capital market. Uganda needs more listed companies, corporate bonds, actively traded securities and secondary-market transactions. A deeper market would reduce dependence on bank financing and create more channels for long-term investment.
Second, strengthen pension-fund mobilisation. With a pension score of 28, Uganda has substantial room to expand institutional investment and channel more long-term savings into productive domestic assets.
Third, improve legal enforceability. The gap between Uganda’s legal score of 69 and Rwanda’s 81 and Kenya’s 76 indicates that investor confidence can be strengthened through more predictable and enforceable financial-market rules.
Fourth, build on the FX advantage. Uganda’s 81-point FX score is a major competitive asset. Continued development of FX swaps, hedging instruments and interbank liquidity could make Kampala increasingly attractive to regional and international investors.
Fifth, accelerate regional integration. Given the limited size of the domestic market, Uganda stands to gain considerably from interconnected East African capital markets, interoperable payment systems and cross-border investment mechanisms.
A strong foundation, but the next test is harder
Uganda’s fourth-place ranking in Africa and first place among the EAC economies assessed by the AFMI is a significant achievement.
But the ranking should not encourage complacency.
The country’s 96-point macroeconomic score and 81-point FX score show that Uganda has built strong foundations. Its 47-point market-depth score and 28-point pension score, however, expose the structural limitations that could prevent it from becoming a major regional financial centre.
The next stage of Uganda’s financial-market development will therefore be less about proving that the economy is stable and more about demonstrating that its stability can be converted into long-term capital, deeper markets and productive investment.
The opportunity is considerable. Uganda has the macroeconomic platform, a relatively open FX market and an increasingly supportive regulatory environment. What remains is to build the scale and liquidity that allow those strengths to finance businesses, infrastructure and structural transformation at a much greater level.
For Uganda, the message from the 2026 AFMI is therefore both encouraging and demanding: the country has become one of Africa’s strongest financial-market performers, but it must now make its markets deeper, not merely more stable.
Source: Absa Africa Financial Markets Index 2026, produced by OMFIF in association with Absa Group Limited. The index covers 29 African economies and assesses six pillars: market depth; access to foreign exchange; market transparency; pension-fund development; macroeconomic environment; and legal, tax and regulatory standards.
https://thecooperator.news/absa-africa-financial-markets-index-2025-to-launch-on-october-16/
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