The UK’s development finance institution and impact investor, CDC Group, has signed a partnership agreement with Rwanda Finance to support the development of a new international financial capital for Africa.
The Kigali International Financial Centre (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.
The finance centre is modelled on Luxembourg and Singapore in the way it will provide a wide range of services for both regional and international clients.
Rwanda Finance is mandated by the Government of Rwanda to develop effective frameworks for regulations, tax and capacity-building in the country. The organisation is also set out to promote the KIFC as a jurisdiction which provides a range of professional, business and financial services to international clients.
This partnership will see CDC provide expertise that will help shape a strong legal and regulatory framework, which is designed to attract institutional investors seeking to finance African businesses through a world class financial centre.
During the virtual signing of the partnership, Rwanda Finance’s CEO, Nick Barigye, said: “This partnership is a major milestone for our nascent International Financial Centre. It will ensure that we have an optimal legal, regulatory and institutional framework that is in line with international norms and standards.”
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, also commented: “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.
“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.”
The KIFC will only support transactions that have a substantial business and economic purpose, rather than those that are designed for managing tax liabilities.
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 ratedthe 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).