Rwanda is moving to cement its position as the financial capital of Africa by drawing in different investments and partnerships. Such partnerships include developing Kigali as a financial hub through the Kigali International Finance Centre, a hub supported by government-owned Rwanda Finance.
CDC Group, the UK’s development finance institution and impact investor, in June signed a partnership agreement with Rwanda Finance to support the development of a new international financial capital for Africa.
The Kigali International Financial Center (KIFC) is intended to be a world-class financial hub, designed to promote inward investment and the creation of thousands of highly skilled financial sector jobs for the benefit of Rwanda and the African continent.
This partnership will see CDC provide the expertise that will help shape a strong legal and regulatory framework that is designed to attract institutional investors seeking to finance African businesses through a world-class financial center.
Rwanda Finance was established to promote and develop Rwanda as a business and financial center of excellence by promoting cross-border trade and investments. “This partnership is a major milestone for our nascent international financial center. It will ensure that we have an optimal legal, regulatory and institutional framework that is in line with international norms and standards,” said Rwanda Finance CEO, Nick Barigye, during the virtual signing of the partnership.
He added that Rwanda already has a strict compliance framework which makes the country an ideal conduit for multinational investment deals.
Nick O’Donohoe, Chief Executive of CDC Group, said, “The African continent needs a vibrant and stable financial services industry to foster inward investment and nurture a professional and technical skills base to support wider economic development.”
CDC Group is the UK’s first impact investor with over 70 years of experience in successfully supporting the sustainable, long-term growth of businesses in South Asia and Africa.
“It is still very early days in Kigali’s development as a financial hub, but we are confident it will deliver on its early potential. And if it does, then I see no reason why we wouldn’t look to use it ourselves.”
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KIFC only supports transactions that have substantial business and economic purpose, rather than those that are designed for managing tax liabilities. Rwanda Finance is mandated by the government of Rwanda to develop effective frameworks for regulations, tax, and capacity-building and to promote the Kigali International Financial Center as a jurisdiction that provides a range of professional, business and financial services to international clients.
The KIFC is modeled on Luxembourg and Singapore in the way it will provide a wide range of services for both regional and international clients. The Center has the vision to become the preferred inland center of excellence for investments in Africa. It also seeks to emerge as an efficient and effective nexus for cross-border trade and investments in the entire Eastern and Central African region, and beyond.
Rwanda has already made great strides to ensure that the new KIFC initiative thrives. The country has a stable and resilient economy with a 10-year average growth rate of 8.6%. It has also been rated the number one country in Africa for government transparency according to the 2019 Transparency International Report. Rwanda is ranked second for the rule of law in Africa according to the WJP Rule of Law Index 2020.
Rwanda also has established trading relationships with other African markets and is a key player in the creation of the African Continental Free Trade Agreement (AfCFTA).
In May 2020 Rwanda Finance Limited (RFL) signed an agreement with Casablanca Finance City (CFC) to promote investment and cooperation between Morocco and Rwanda in financial services. The partnership which was signed virtually seeks to promote best practices, through which CFC will support the development of the KIFC.
Rabat and Kigali have strengthened their cooperation in recent years, with state visits carried out in 2016 by King Mohammed V and President Paul Kagamé. Numerous strategic partnerships have been concluded in key areas, including the agreement on double taxation and the prevention of tax evasion.
Kigali International Financial Centre promotion efforts recently saw the cross-listing of South African firm, RH Bophelo Limited on the Rwanda Stock Exchange (RSE). This was partly a result of efforts to promote KIFC following pitching to global firms to consider cross-listing on the RSE.
New reforms are being developed to enhance Rwanda’s competitiveness, ensure compliance with international standards, and better leverage regional opportunities and integration into the global economy.
Rwanda offers a pro-business environment, excellent infrastructure, cost-competitiveness, and benefits from strong leadership with the Government of Rwanda’s Vision 2035 and 2050, guiding the way forward.
The country has been aggressively pushing the idea of Kigali being a top city in technology, finance, and conferencing, which has attracted global attention. Before the onset of Covid-19, the country had managed to establish itself as the leading conference country in Africa overtaking Kenya and South Africa.
It has also been positioning itself as a major IT hub outside of Kenya, Nigeria, South Africa and Egypt, attracting top-notch companies as well as key foreign direct investments. Now, with the target of a financial hub, Rwanda is set to have its third (after tech and conferencing) competitive edge over competitors like Kenya, Ghana, Nigeria and South Africa.
