Uganda’s rise in markets index: The reform story behind new ranking

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OPINION

By Kenneth Egesa

Uganda’s continued ascent in the Absa Africa Financial Markets Index (AFMI) to third place in 2025, up from fourth in 2024 among 29 African economies, is more than a statistical milestone. It reflects a deliberate and sustained reform agenda aimed at deepening, modernising and strengthening the resilience of the country’s financial markets.

The achievement was recognised at the AFMI and Economic Outlook Forum held on January 27, where Bank of Uganda governor Michael Atingi-Ego described Uganda’s progress as “a testament to deliberate, patient reform”. Indeed, Uganda’s rise from 10th position in 2017 to third in 2025 — behind only Mauritius and South Africa — signals growing sophistication, stability and credibility in its financial architecture. The AFMI assesses market development across indicators such as market depth, transparency, tax, regulatory environment, access to foreign exchange, pension fund development and macroeconomic environment. Uganda’s improved ranking is anchored in three major reform pillars: foreign exchange market development, sustainability integration and legal-regulatory modernisation.

The central bank has implemented targeted reforms to strengthen interbank liquidity, enhance transparency and improve reporting standards in the foreign exchange (FX) market. The adoption of the Foreign Exchange Global Code aligned market practices with international best standards in ethics, governance and accountability.

Complementary measures — including cross-currency repurchase agreements and enhanced FX liquidity management tools — have supported reserve management while reducing pressure on the spot market. For exporters and importers, these reforms translate into more predictable exchange rate movements, improved access to foreign currency, and reduced transaction risk. For investors, they signal a well-functioning and transparent currency market.

Uganda has also integrated environmental, social and governance principles into financial supervision, issuing guidance on the implementation of the International Financial Reporting Standards Sustainability Standards S1 and S2. This reform shifts sustainability from a voluntary initiative to a core financial stability consideration.

By accelerating climate and sustainability disclosures across the financial sector, Uganda aligns itself with global reporting norms and strengthens resilience against environmental and transition risks. The result is improved risk management, enhanced investor confidence, and greater access to international capital — particularly green and climate-linked finance. Robust markets require robust legal foundations. The signing of the Global Master Repurchase Agreement with commercial banks has streamlined monetary operations and strengthened secured interbank transactions under internationally recognised standards. Progress toward International Swaps and Derivatives Association agreements and the development of a close-out netting framework further enhance legal certainty and counter-party risk management. Though technical, these reforms are foundational. They reduce systemic risk, increase investor protection, and deepen financial intermediation.

The AFMI ranking captures structural progress, but broader market indicators underscore the momentum:

1) Daily foreign exchange turnover increased to $22.0b in 2025, up from $17.5b in 2024

2) Adoption of the FX Global Code has strengthened ethical conduct and transparency across market participants

3) Foreign exchange reserves stand at $5.9b in 2025, equivalent to 4.2 months of import cover, reinforcing Uganda’s external resilience.

These metrics reflect a financial sector that is growing and maturing. Uganda’s performance is the result of co-ordinated action. The Bank of Uganda acknowledges the finance ministry and Parliament for enacting enabling legislation that have strengthened market development. Financial sector regulators, commercial banks, pension funds, insurers and capital market operators have all contributed to reinforcing the institutional fabric of the system.

As Atingi-Ego emphasised at the forum, the ranking is not merely a scorecard; it is a call to sustain reform momentum. Continued collaboration across stakeholders will be essential to ensure that Uganda’s financial markets deepen, more inclusively and resilient, supporting the country’s broader socio-economic transformation.

The writer is the director of communications and public relations at Bank of Uganda