How Kigali International Financial Centre aims to Fast-track Rwanda as a Preferred Financial Centre for Investments in Africa.
By Nick Barigye, Chief Executive Officer of Rwanda Finance Limited
It is no secret that African economies have been among the fastest growing in the world over the last 10 years. African GDP has tripled since 1990 and the continent recorded more than twice the compound annual growth rate (CAGR) compared to Europe and Latin America during 2010 – 2019.
With huge spikes in VC investment and unparalleled predicted growth within the digital sector, it is clear global investors should be turning their attention to the thriving continent.
Of the world’s fastest growing economies, African countries are frequently listed and Rwanda sits firmly among these countries.
We are working hard to showcase Rwanda as an attractive destination for international investors and our recently launched IFC is the vehicle through which we plan to do this. Kigali International Financial Centre (KIFC) debuted on the Global Financial Centres Index (GFCI) in September 2021. We are pleased that the GFCI recognised us as one of the most promising financial centres in the coming decade – we were among the top five IFCs in Sub-Saharan Africa.
We have also done some extensive work to address some of the concerns often cited around investing in Africa – in fact, like Singapore and Luxembourg in their respective continents, we are among the highest ranking across several metrics including security, resilience, corruption, cleanliness.
To further bolster our nation’s position, KIFC aims to develop the financial landscape especially around legality and tax.
We have a robust compliance framework – 17 laws have been introduced in the last two years, building a legal and regulatory structure for regional and international investors that adheres to the highest international standards. One law, for example, addresses fiscal and non-fiscal incentives for foreign experts who take up residency in Rwanda, to attract expertise and investors in the financial and tech sectors. Our partnerships with organizations like the British International Investment (CDC rebranded to BII) in the UK, which plays an advisory role in this area, has been key to the development of these laws.
Additionally, to incentivise investors, Rwanda has signed double tax avoidance agreements (DTAAs) with ten countries including Luxembourg, Qatar and China which adds to the long list of treaties we have already signed with several states including Jersey, Belgium, and UAE. Our growing network of DTAAs provides the legal certainty, transparency and reliable international tax framework that is critical for those who want to invest in Rwanda and through KIFC.
All these have attracted great interest from the private sector and institutional investors and it has resulted in the domiciliation of more than $600Million: $350Million FEDA fund, an-African trade and export fund established by AfreximBank supporting and fostering intra-African trade; $250Million Virunga fund between the Qatar Investment Authority and Rwanda Social Security Board; and $10Million Angel Investment SPV, a regional special purpose vehicle registered in Kigali, by a network of African based angel and venture capital investors – Dakar Network of Angel Investors (DNA).
Fintech is a priority for KIFC, and the regulatory sandbox put in place from the National Bank of Rwanda in 2017, hasenabled us to promote fintech innovation by turning Rwanda into a proof-of-concept hub, in turn offering support to the several unicorns that have chosen Kigali as a base for their regional operations. For example, cross-border payments firm Chipper, co-founded by a Ghanaian and Ugandan, has recently been valued at $2.2 billion after a series of investment rounds, and is one of our first investors. It’s an example of a fintech company growing exponentially because of new innovations created for the many Africans underserved by traditional financial methods. We are excited at the huge opportunities such innovations can bring to our country.
To bolster the shift, we have seen in Rwanda towards green and sustainable financing, KIFC has recently joined the Financial Centres for Sustainability (FC4S) and the Sustainable Stock Exchange. These organisations aim to accelerate the shift to sustainable finance and encourage sustainable investment respectively. Also, later this year KIFC plans to launch a 10-year Sustainable Finance Roadmap to coincide with COP27.
Alongside this we are extremely pleased that one of our impact investors, Chancen International, recently secured a $21 million investment which will provide student financing for 10,000 young people in Rwanda and South Africa.
These are early achievements and there is so much more to come which will help further our vision as a preferred international financial centre for investments to Africa.
And the wider continental picture is promising, meaning there has never been a better time to invest in Africa. Covid and the ongoing uncertainties have set African economies back and the world in general, and it may be true that these economies are not able to bounce back in the same way bigger markets are predicted to, but the saying ‘necessity is the mother of invention’ is never more true in times of volatility. And it couldn’t be more true for a growing number of African entrepreneurs and established businesses who are seeing the potential to serve unbanked Africans.
Examples of this include the provisional deal for telecoms giant MTN (South Africa) to open up their mobile payment platform in Nigeria giving them access to up to 40 million Nigerians; and the rise of fintechs providing mobile banking services and digital payments to those who need it most. The opportunities for investment in Africa have not gone unnoticed with big investors. Last year more than $1bn was invested by VC firms in the top African fintech companies.
Additionally, the recent inaugural Financial Times report of Africa’s fastest growing companies and pan-African digital payments firm, MFS’ recent acquisition of US-based Global Technology Partners, are further signals of change on the continent.
All of this combined provides the perfect storm for ongoing global attention and KIFC aims to be at the heart of this. As the year continues KIFC will continue to bolster our international financial services to ensure our nation is an attractive proposition for local, regional, and global investors. Our next step is to showcase our efforts to transform Rwanda into an African-wide financial hub at the Commonwealth Business Forum taking place from 20-26 June, under the umbrella of the Commonwealth Heads of Government Meeting, in Kigali.
Nick Barigye is the Chief Executive Officer of Rwanda Finance Limited, the agency tasked with leading the development of Rwanda as a preferred destination for international investment and cross-border transactions in Africa. RFL is working with key stakeholders to develop and support the Kigali International Financial Centre through investment promotion, policy advocacy and sector upskilling.