Stock markets across Africa are largely unheralded, but for the last few years they have provided impressive investment returns compared to their counterparts elsewhere. We look back to 2005 and review the performance of the stock markets across Africa for 2005. Based on a report from the Ghanaian financial group Data Bank Ltd we identify the top ten stock markets in terms of US dollar returns.

10. Tunisia (Return 8%) - As Tunisia gradually opens up its economy and moves away from a economy dominated by state enterprises, the Stock market has benefited from increased activity directly related to privatization. 2005 was a busy year as former state forms Tunisie Lait, Skanes Palace International Hotel, Tunisian Tire Industries Company amongst other came onto the market.

9. Zimbabwe (Return 9%) - Despite political upheaval and uncertainty, and rampant inflation. The Zimbabwean stock market was able to return a respectable 9% in dollars returns. The situation should however be viewed in terms of the very strict exchange controls in operation in Zimbabwe meaning foreign investors will find it difficult to repatriate their gains, and for local investors the stock market is one of the few havens against inflationary trends.

8. Namibia (Return 25%) - A steady well run economy strengthened by strong commodity prices has reaped rewards for the Namibia Economy. With GDP growing at 5.4% and income per capita at 85%, the credit and equity markets in the country have benefited substantially. Namibia saw its credit rating increased to BBB- by Fitch and investors are being attracted to the stock market in growing numbers.

7. Cote d’Ivoire (Return 25%) - As the fragile peace in Cote d'Ivoire's civil strife seems to hold, the stock market has shown some recovery and investors hope for a more sustained peace and the hope that Cote d’Ivoire can recover its position as one of Africa's more vibrant economies.

6. Malawi (Return 29%) - Malawi sock exchange's impressive returns have been fueled by a combination of cheap corporate valuations, high foreign exchange risk and a small market capitalization. The cheap valuations means good fundamentals abound, with the forex risk setting the base level for acceptable returns.

5. South Africa (Return 30%) - Africa's largest stock market by a distance, put in a very strong performance in 2005. Egged on by ever increasing commodity prices as well as keen investor interest in the South African Telecommunications and Banking sectors which also give some controlled exposure to the rest of Africa. South Africa posted an impressive US dollar return of 30% in 2005.

4. Kenya (Return 43%) - Strong corporate earnings from the likes of Kenyan Airways and Kapochura Tea Company Limited, a weak Kenyan Shilling lowering valuations of listed firms and favorable world tea price helped the Nairobi exchange's main tracking index, the NSE 20 Share Index reached a 9 year high and the exchange provided returns of 43% across the board.

3. Uganda (Return 81%) - Uganda's stunning performance was driven by very cheap company valuations as a result of low local currency value. Reforms put in place by the current government have also helped to create a benign environment for the stock market and encouraged capital inflows fueling equity price growth.

2. Zambia (Return 116 %) - Strong copper prices, record corporate earnings, and a significant improvement in the Zambia national debt situation all combined to provide the framework for the second best stock market performance in Africa. A return of 116% made the Lusaka exchange not only one the best performing stock markets in Africa, but also in the world.

1. Egypt (Return 155%) - A combination of the strong returns from the Oil, Banking and Telecommunications sectors in Egypt have for two years running enabled the Cairo bourse produce the best returns in Africa. At 155%, the US dollar returns outstripped those from almost anywhere else in the world and the question being asked in Egyptian financial circles is how long the bull run will last.

2005 was an exciting year for African stock markets, and 2006 is shaping up to be equally intriguing, but Investors are reminded that the returns from emerging markets in Africa are matched by high risk, and a varying regulatory environment and investors are advised to take professional advice before considering investing in any of these markets.