With growing competition for international capital across the world, the Kigali International Financial Centre could have an edge in attracting and hosting Foreign Direct Investment in the financial sector which is an emerging opportunity on the continent, experts say.
Kigali International Financial Centre (KIFC), is an initiative that seeks to position Rwanda as a preferred jurisdiction for investments into Africa, as well as reform the domestic industry.
Despite the growing competition for international capital, industry observers say that KIFC has an upper hand in financial services such as financial technology investment, impact investment as well as trade financing among others.
Speaking at a webinar, Central Bank Deputy Governor Soraya Hakuziyaremye said that the Rwandan ecosystem has over time refined its ecosystem and suitability for digital finance at the same time ensuring sound regulatory practices and compliance to provide confidence to investors.
This, she said, positions KIFC ideally at a time of growth in the sector.
Already, the local ecosystem features fin-tech firms such as Jeff Bezos funded Chipper Cash which facilitates cross border payment and cash transfers; SAVE, a platform by Exuus Ltd which facilitates saving groups through an open and user-friendly saving groups’ ledger handling.
The local ecosystem also features Uplus Mutual Partners (U+) which allows people from all walks of life to connect on the platform to contribute and save for whatever causes they may be involved in as well as Mobile Money Rwanda Ltd, a subsidiary of MTN Rwanda.
Impact investment is another aspect that was mentioned as unique for KIFC for local, regional and global investors.
Impact investment is made with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return. Impact investments provide capital to address social and environmental issues.
Hakuziyaremye noted that already, the centre has attracted Chancen International, a social impact investor with focus on tertiary education and works to avail financing for young people in Africa to access quality education.
The ecosystem also has expertise working with social investors such as players in renewable energy (Solar, peat) and access to clean water among others.
With the African Continental Free Trade Area Agreement already operational, cross border trade financing is another aspect where KIFC was said to have an edge especially for firms with involvement in the payment system among others.
Chief Investment Officer of Rwanda Finance Limited, Ntoudi Mouyelo observed that in pursuit of relevance and impact, they considered global best practices to inform KIFC structure and approach.
"While we look at international best practice to inform the establishment of our centre; ultimately KIFC has been built for Africa founded upon connectivity, compliance and operational ease,” he said. He added that KIFC is further unique in that Rwanda is a member of three economic blocs, the East African Community, Common Market for Eastern and Southern Africa and Economic Community of Central African States meaning that KIFC members access Pan African markets.
President Rwanda Bar Association, Julien Kavaruganda added that there is adequate consultation as well as education on new legislation and regulations being developed to make KIFC attractive.
A report published by Rwanda Finance Limited and Africa Legal examining challenges to confident investment noted that in 2020, FDI into Africa was just $40 billion, down from $45 billion in 2019.
The investment was however concentrated in a few economies such as Egypt, Congo, South Africa and Nigeria.
Among the challenges in the way of attracting capital is also the lack of infrastructure to support the investment industry on the ground in many countries which KIFC is working to address as a modern international financial centre.
Other challenges cited were skills gaps and limited pool of highly talented professionals.
"The skill sets that respondents ranked as the top five most in demand on the ground to support the investment industry were legal professionals, followed by professionals working in fund management, business development, human resources and risk management. The need for IFCs to focus on developing their human capital to support growth was underscored by the 2020 Global Financial Centres Index, where three out of the top five IFCs—New York, London and Hong Kong—also led in human capital development,” the report reads in part.
KIFC already has tenants such as Westbridge Mortgage is a Canadian holding company and mortgage bank; AfricInvest, a private equity investment firm; JurisTax, a Mauritian Trust and Corporate Services Provider; Fund for Export Development in Africa (FEDA), a subsidiary of the African Export-Import Bank (Afreximbank).
Others include; Southbridge Rwanda is the first pan-African investment bank offering financial advisory and strategic consulting; RH Bophelo, a South Africa-based healthcare investment company; Dakar Network of Angels, an Angel Network based in Dakar investing in startups in Francophone Africa and Chancen.