African Convertibility Indices
ICAP Africa and African FX Partners are happy to announce that they are nearing completion of a new set of products for financial risk management in Africa. Our development of Convertibility Indices is essential because they quantify a critical, non-financial risk that standard economic data misses: the practical ability to move money in and out of a country. ICAP and AFXP have unparalleled access to both interbank and parallel market FX price data going back many years, this allows us to track and practically assess the liquidity of particular currencies.
For businesses such as yours, in Africa, this is a primary concern. Here’s why such an index is a crucial barometer:
Goes Beyond the Theoretical: A currency might be officially "convertible," but bureaucratic hurdles, capital controls, and limited hard currency in the central bank can make it practically inconvertible, our index measures this real-world reality.
Predicts Transaction Costs & Delays: It directly informs companies about the hidden costs and time delays they will face in repatriating profits, paying international suppliers, or hedging their exposure. This is vital for cash flow planning and operational efficiency.
Measures True Country Risk: It serves as a direct proxy for financial stability and policy risk. A deteriorating convertibility score is an early-warning signal of economic distress, often ahead of a major devaluation or the imposition of stricter capital controls.
Provides a Comparative Framework: It allows you to rank and compare countries across the continent on a like-for-like basis regarding this specific, high-stakes risk, enabling better capital allocation and market entry/exit decisions for your clients.
In short, while others analyse exchange rates, our Convertibility Index analyses accessibility—which is often the true barrier to business in Africa. Please contact us for more information and access to these indices – info@icapafrica.org .”