Rwanda’s plan to become financial hub gains momentum

06Dec 2019
Correspondent
Kigali
The Guardian
Rwanda’s plan to become financial hub gains momentum

Momentum is building towards realising full development of the much-anticipated Kigali International Financial Centre (KIFC), an initiative by the Government that seeks to position Rwanda as a business and financial hub in Africa.

Celestin Rwabukumba, Chief Executive at Rwanda Stock Exchange.

A new company, Rwanda Finance Ltd, has been created to spearhead the development of KIFC and a chief executive officer was appointed. Several financial players have already bought into the idea.

In 2017, the Government approved the establishment of the KFIC. The blueprint would basically position Rwanda as home for nationally or internationally significant financial service providers, enabling the country to handle finances for others.

They will include banks, investment managers, hedge-funds or stock exchanges, among others. Kigali International Financial Centre (KIFC) is an initiative by the Government that seeks to position Rwanda as a business and financial hub in Africa. File.

The blueprint seeks to facilitate the country to attract a concentration of participants in banking, asset management, insurance or financial markets with venues and supporting services for these activities to take place.

Currently, cities like New York, London, Hong Kong, Singapore and Shanghai are ranked the world’s top financial centres. The most recent ratings by the Global Financial Centers Index (GFCI) show those cities providing competitive environment for investors to do business.

According to GFCI, all the top five cities have an advanced system of payment for goods and services which make commerce and trade very convenient, and investors are assured of returns due to stable assets management policies. London and New York have interchangeably held the top position due to the high quality of mergers, investment opportunities and high credit rating of their stocks listed companies.

London is home to the Bank of England (BoE), one of the most prestigious and oldest central banks in the world. The London Stock Exchange (LSE) is among the world’s top five stock exchanges, and the city has one of the world’s largest banking sectors.

New York, on the other hand, is known for Wall Street whose reputation is synonymous with finance. It is home to two of the world’s largest stock exchanges— the New York Stock Exchange (NYSE) and the NASDAQ, and some of the world’s largest banks have their headquarters there — JP Morgan Chase & Co. and Citigroup Inc.

But there are other known highly ranked financial centres like Tokyo in Japan, Toronto in Canada, Zurich in Switzerland, Beijing in China and Frankfurt in Germany. While Rwanda may not be at the level of the rest of the players, yet, the country seeks to stand out in the region where only Casablanca, Mauritius and Johannesburg always stand out as the financial hubs.

Celestin Rwabukumba, the Chief Executive at Rwanda Stock Exchange sees more benefits if Rwanda fully embarked on positioning itself as a hub for financial services. “The benefits to us as an economy are funds domiciliation and all professional services that come with it (offshore banking, global custodians, trust businesses, fund management,” he said. That alone, he adds, is high paying jobs for industry professionals in addition to tax revenue.

According to the Ministry of Finance and Economic Planning, the goals are to double the value of the financial services sector by 2024 and to double foreign direct investment into the economy. “KIFC will be great to attract FDIs [foreign direct investments], stimulating our capital market and offer long-term funds for our financial institutions,” said Nathalie Mpaka, the Chief Finance Officer at Bank of Kigali.

Under the initiative, the Government through the Ministry of Finance has established a company, Rwanda Finance Ltd, which will spearhead the implementation of the blueprint. A source told Business Times that the new company is particularly tasked with revising tax regimes and legal frameworks for business and investments as well as layout plans to increase financial education and expertise.

For the last 10 years, Rwanda has been attracting new foreign financial services entrants, especially banks starting with two Kenyan banks – Kenya Commercial Bank (KCB) and Equity Bank – which entered the market between 2008 and 2013.

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