CDC Group, the UK ‘s development finance institution and impact investor, has signed a partnership agreement with Rwanda Finance to support the development of a new African financial capital for international finance.
The Kigali International Financial Center (KIFC) is planned to be a world-class financial hub aimed at fostering inward investment and generating thousands of highly skilled jobs in the financial sector for the benefit of Rwanda and Africa.
The financial center is modeled on Luxembourg and Singapore in the manner in which it will provide a wide range of services to regional and international clients.
The Government of Rwanda mandates Rwanda Finance to establish effective legislative, tax, and capacity-building structures in the country. The organization is also committed to promoting the KIFC as a jurisdiction that provides international clients with a range of professional, business and financial services.
The collaboration would see CDC provide expertise to help form a robust legal and regulatory system designed to draw foreign investors seeking to fund African companies into a world-class financial centre.
Nick Barigye, CEO of Rwanda Finance, said while the partnership was virtually signed: “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 framework for compliance, making the country an ideal conduit for multinational investment deals.
CDC Group chief executive Nick O’Donohoe 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 would only fund transactions that have a clear financial and economic intent, rather than those intended for the management of tax liabilities.
Rwanda has already made great strides in making sure the new KIFC initiative is thriving.
The nation has a stable and robust economy with an average growth rate of 8.6 per cent over the last 10 years. According to the Transparency International Report 2019, it has also been ranked the number one country in Africa for policy accountability. According to the WJP Rule of Law Index 2020, Rwanda ranks second in Africa for the rule of law.
Rwanda has also formed trade ties with other African markets and is a key player in the establishment of the African Continental Free Trade Agreement (AfCFTA).