Transforming The Investment Landscape In Africa

IFC: September 2021 saw the addition of Kigali to the Global Financial Centres Index, which measures the competitiveness of financial centres globally. To what do you attribute Kigali’s successful performance and ranking?

KIFC: Yes, that’s correct, Kigali International Financial Centre (KIFC) recently debuted on the GFCI. We were among the top five IFCs in Sub-Saharan Africa and have been identified as one of the most promising financial centres in the coming decade. We are pleased the GFCI recognised us as a promising jurisdiction for investors to consider when domiciling investments on the continent.

Specifically, we would attribute our strong debut ranking to Rwanda’s growing reputation as a safe and secure location for investments, due to our country’s strong leadership and good governance system that is underpinned by the rule of law. 

IFC: KIFC has expanded its base of legislation with the recent passing of 17 new laws aimed at developing the financial services landscape. Can you tell us more about these laws and how they are adding to the current legislative framework?

KIFC: 17 different laws have been gazetted since 2020, building a legal and regulatory framework for regional and international investors that adheres to the highest international standards. One such law provides for fiscal and non-fiscal incentives for foreign experts who take up residency in Rwanda and intends to attract expertise and investors in the financial and tech sectors. Separate laws also provide for preferential tax exemptions for start-ups and the establishment of new legal structures such as trusts, foundations, and special purpose vehicles. Together, these laws are transforming our investment landscape and making Rwanda a ​​preferred financial jurisdiction for investments into Africa. 

IFC: A regulatory sandbox was put in place by the National Bank of Rwanda in 2017 to promote FinTech innovation. How else does KIFC plan to offer support to companies in this arena and what is your regulatory approach for creating a successful digital jurisdiction?

KIFC: The regulatory sandbox established by the National Bank of Rwanda is achieving its aims of turning Rwanda into a proof-of-concept hub, as several unicorns have sought out Kigali as a base to consolidate their regional operations. A priority for the KIFC is to continue attracting FinTech oriented investors and maintaining a conducive ecosystem for FinTech players and actors to pilot and scale their investments across the continent. 

While the FinTech industry continues to accelerate financial inclusion in Sub-Saharan Africa, KIFC is committed to leveraging this exciting opportunity for Rwanda. Most of Africa’s population is unbanked and underserved by traditional financial institutions, while also being ready to adopt new innovations. As a result, FinTech start-ups are growing exponentially.

Rwanda is also providing tax incentives for forward-thinking FinTech companies and enacting critical laws to establish a pro-business regulatory framework for our growing FinTech ecosystem.

IFC: Rwanda has recently accelerated the signing of double taxation treaties with jurisdictions such as Qatar and Luxembourg. How important are these economic ties to Rwanda as an investment destination?

KIFC: Rwanda recently signed double tax avoidance agreements (DTAAs) with ten countries including Luxembourg, Qatar and China. This has further added to the umbrella of treaties we have signed with several jurisdictions including South Africa, Mauritius, Morocco, Belgium, Jersey, Turkey, Singapore, UAE, to name a few.

Our extensive network of DTAAs provides investors not only with beneficial, transparent and reliable international tax frameworks but also provides the legal certainty that is critical for international market entrants and those that we are seeking to attract to KIFC.

IFC: Rwanda and Singapore entered into a financial services partnership last year, labelled the ‘Financial Trust Corridor’. Can you tell us more about the aims of this initiative?

KIFC: Rwanda aims to be for Africa what Singapore is for Asia, and there are significant similarities between our two countries, so we were particularly pleased to secure this agreement. The ‘Financial Trust Corridor’ (FTC) aims ​​to strengthen the level of trust and cooperation between businesses and financial institutions in Rwanda and Singapore, to support trade. The FTC will increase data exchange between the two countries and allow respective banks to share information regarding SMEs and businesses.

IFC: KIFC recently announced the establishment of the $250 million Virunga Africa Fund I, which will invest in key industries within the private sector. What do you hope is achieved with this investment opportunity?

KIFC: In partnership with the Qatar Investment Authority and Rwanda Social Security Board, we established the Virunga Africa Fund I in November 2021. It is the first phase of the pan-African investment fund and will be domiciled in Kigali, with regional activities across four key markets in Eastern and West Africa.

The outcomes we hope to achieve are significant. By investing in critical sectors such as education, financial services, healthcare and the digital economy, the fund aims to enable economic and social transformation across the region. The COVID-19 pandemic caused a deepening of social inequalities, and we hope that the fund will play a part in furthering the continent’s development, boosting the post-pandemic economic recovery and building resilience against threats such as climate change. 

IFC: How does KIFC intend to adhere to the regulatory standards set by international bodies such as the EU and OECD?

KIFC: Soon after KIFC became operational, Rwanda passed new laws regarding Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) to ensure compliance with OECD and Financial Action Task Force (FATF) guidelines, while also enabling KIFC to collaborate with other financial centres on criminal assistance matters. More recently, Rwanda ratified the OECD’s Convention on Mutual Administrative Assistance in Tax Matters (MAAC).

Complying with international standards is crucial as we aim to position KIFC as one of the leading financial centres in Africa. We will continue to do all we can to ensure that Rwanda offers international investors an attractive, pro-business environment in full compliance with international standards and regulatory requirements.

IFC: ESG is currently gaining momentum as a key measure of corporate social responsibility. How much of Rwanda’s investment activity is represented by impact investing; and how does KIFC aim to implement a strong sustainable finance framework?

KIFC: KIFC is developing avenues for ESG-driven investment in Rwanda and Africa. In particular, Rwanda has seen an accelerated shift towards green and sustainable financing, having recently joined the Financial Centres for Sustainability (FC4S), a collective of international financial centres aiming to accelerate the shift to sustainable finance and achieve the goals of the 2015 Paris climate accord.

Rwanda is also a member of the Sustainable Stock Exchanges Initiative, which seeks to enhance performance on ESG issues and encourage sustainable investment by providing a global platform for collaboration between local and regional exchanges. Later this year, KIFC is also set to launch the 10-year Sustainable Finance Roadmap, coinciding with this year’s COP27 in Sharm el-Sheikh.

On the social spectrum, impact investing has become a mainstream financial instrument in recent years. Earlier this year, Chancen International, one of the impact investors domiciled in KIFC, secured the first round of funding for the innovative Future of Work Fund. The US$21 million investment will increase access to tertiary education in the region by providing student financing for 10,000 young people in Rwanda and South Africa.

IFC: In 2021, Rwanda's lawmakers adopted a new law governing nationality in a bid to attract foreign skills and expertise. What other mechanisms are in place to nurture international talent and to support the upskilling of domestic talent in the financial services sector?

KIFC: One of KIFC’s key missions is to promote the upskilling of finance professionals in Rwanda to ensure there is a talented pool of professionals to support investors. We have been working with ​​Rwanda’s private sector and educational institutions to upskill the sector, making it more competitive and stimulating growth through the creation of jobs and the provision of financial services.

International higher learning institutions, such as Carnegie Mellon University, African Leadership University as well as the African Institute of Mathematical Sciences, have established a presence in Rwanda and are helping to upskill and provide further education to the population. Meanwhile, ​​KIFC is supporting professional development programmes for finance executives in partnership with globally reputable institutes, in areas of financial compliance, risk management, and corporate governance.

KIFC recently partnered with INSEAD – the business school for the world - the Brussels Africa Hub, Rwanda Bankers’ Association, and Rwanda Development Board, to organise an executive education program in Rwanda on Valuation and Risk Management in Banking. 28 Rwandan banking and finance executives took part in this programme which marked a positive first step in attracting one of the top-tier global business education institutions.

IFC: Where can we expect KIFC to focus its efforts during 2022?

KIFC: KIFC will continue to foster and boost international financial services, providing an attractive proposition for local, regional, and global investors seeking to structure and set up their investment vehicles, or consolidate and deploy their capital efficiently and effectively across the continent.

We are participating at the much-anticipated Commonwealth Business Forum in June 2022, which will be held in Kigali under the auspices of the Commonwealth Heads of Government Meeting. We look forward to showcasing KIFC’s journey towards transforming Rwanda into a pan-African financial hub.