Rwanda is betting on financial sector services to grow its economy, with laid down reforms to attract investors into the country.
Currently, the financial sector contributes 3 per cent to the Rwandan economy, by 2035, the government aims to increase the financial services sector’s contribution to the GDP to 5.2 per cent and to 11.8 per cent in 2050.
Kigali International Financial Center (KIFC) launched three years ago is part of the strategy to turn around financial sector’s fortune, with incentives geared towards positioning the country as a top financial hub in Sub-Saharan Africa. Since its set up in 2020, the center has convinced over 100 investments (Holding companies, Funds, FinTech’s among others) to set up in the country.
In an interview, Jean-Marie Kananura, Chief Investment Officer Rwanda Finance Limited says the idea behind positioning Rwanda as the continent’s financial hub is necessitated by the opportunities in that space. However, the initiative will also provide alternative source of financing to businesses, boost Rwanda’s foreign currency reserve, create jobs and expand country’s tax base.
“The establishment of the Kigali International Financial Centre makes it possible for businesses to domicile in Rwanda, and also expand in the region and beyond. Through KIFC, various structures are facilitated to set up in Rwanda. These include; Investment Funds, Holding Companies, Special Purpose Vehicles, FinTechs, Trusts, PEs, VCs, and Global Trading Companies.”
“To make Rwanda as a preferred destination for investors means we must have better legal framework, develop necessary skills and enhance our promotion activities,” he said. “We have 16 tax treaties in force to enable firms setting up in Rwanda for instance avoid being taxed twice, which is an incentive,” he noted.
Depending on the activities of a company intending to set up in Rwanda, the process takes not more than six months, with robust due diligence in place to curb cases of money laundering. Apart from targeting well established companies, the center also is open to startups, providing them with a conducive environment to grow their business ideas.
“One of the startups which has benefited is the America’s Zipline, it designs, manufactures, and operate the world’s largest instant logistic and delivery system.”
Other notable investment funds that have been domiciled through Kigali International Financial Center (KIFC) over the last two years, include: $670million (FEDA fund), $250million (Virunga fund) and $21million (Future for work fund). KIFC also has Pharmaceutical Technology Foundation created by African Development Bank.
Since debuting on the Global Financial Centres Index (GFCI), a ranking of the competitiveness of financial centers across the world, KIFC retained its fifth position last year in Africa.
The index rates 116 financial centers, combining assessments from financial professionals with quantitative data.
On the continent, KIFC comes after Casablanca, Cape Town, Johannesburg and Mauritius.