African countries are making steady progress in building financial markets that can help businesses raise money and fund infrastructure, but thin trading remains a hurdle to attracting investment and financing growth, an annual survey showed.

The 2026 Africa Financial Markets Index, compiled by Absa bank and think tank OMFIF, found that 21 of the 29 countries surveyed recorded higher scores as easing inflation, stronger foreign exchange reserves and regulatory reforms helped deepen markets.

The gains come against a backdrop of rising trade tensions, conflicts in Ukraine and the Middle East and elevated energy costs, which the report warned could undermine economic stability across the continent.

"The global environment is far from straightforward," Absa Group Chief Executive Kenny Fihla wrote in the report, pointing to risks including a super El Nino. 

"In these complex times, all countries must bolster their fundamentals to best weather the storm. Happily, many African countries are in that very position," he said.

South Africa retained the top spot, followed by Mauritius and Namibia. Cape Verde was the biggest mover, climbing six places to 13th on stronger foreign exchange reserves and new sustainable finance initiatives.

Ghana rose four places to sixth as falling inflation, stronger stock market activity and improving economic conditions aided its recovery from a debt crisis.

Botswana and Nigeria each slipped two places to seventh and eighth respectively. Nigeria was hurt by weaker foreign exchange access and transparency scores, while Botswana suffered from rising inflation.

The index measures how easily countries can raise and move capital, examining stock and bond markets, access to foreign currency, pension savings, economic conditions and regulation.

Developing these markets can help businesses access financing beyond traditional bank loans and channel savings into infrastructure and other long-term investments. But the report found that expanding financial products and market infrastructure had not consistently translated into greater trading activity, leaving liquidity an ongoing challenge.

African markets are seeking to support larger fundraising efforts, including billionaire Aliko Dangote's ongoing refinery IPO in Nigeria, which is aiming to raise billions of dollars from retail and institutional investors.

Now in its 10th year, the index introduced a revised methodology measuring countries against fixed benchmarks of good practice rather than against one another. Historical scores were recalculated to allow comparisons. 

The average score reached 56, its highest in a decade.